Why does Bitcoin exist? What is Bitcoin and what are the advantages of electronic currency? Differences between cryptocurrency and fiat money

All countries in the world have their own national currency. For Russia it is the ruble, for the USA it is the dollar, for European countries it is the euro. Now the Internet has its own national currency, called Bitcoin. Cryptocurrency has become an integral part of many modern people. And there are a large number of reasons for this.

What is Bitcoin and what are the advantages of electronic currency?

Bitcoin electronic money is a fundamentally new type of decentralized digital currency. It can only be used on the Internet. This currency is not under anyone's control. Its release and circulation is carried out largely thanks to millions of computers turned on and connected to the Internet.

The Bitcoin currency has the following advantages that make it popular among users of the global network:

Ease of use

In order to start using cryptocurrency, you only need to spend 5 minutes of time. To open a current account in a banking organization, you sometimes have to spend 1.2 hours or even a whole day. It is possible that you may encounter difficulties in doing so. Once you open a Bitcoin wallet, you can use it immediately without any fees.

Minimum commission

When funds are transferred from a bank to a bank client’s account in another country, a commission is charged, sometimes amounting to 50 percent. With bitcoins, there is no commission charged for transferring money to a native of another country.

Translation speed

Bitcoins are sent by users to different countries around the world. When transferring, they arrive at the account of another person in a maximum of 5 minutes, which is very convenient.

Anonymity

Internet users have the opportunity to create several Bitcoin wallets without being tied to a specific name and address.

Transparency

The peculiarity of Bitcoin is that it stores the entire history of transactions. When a user has a publicly open Bitcoin address, everyone can see how much cryptocurrency is in the account. Only, they will know whose electronic funds they are if the user himself decides to confirm that this is his address.

Basic functions of Bitcoins

The first mention of bitcoins began to appear in 2009. It is believed that the creators of this currency are a programmer or a group of programmers known under the pseudonym of the Satoshi Nikamoto network. The exact name of the creator is difficult to determine, but he managed to create an application that is an electronic wallet installed on the user’s computer device to store cryptocurrency. It has its own functions, among which are the following:

medium of exchange
means for saving your capital,
unit for calculations.

How can you use bitcoins?

Cryptocurrency in its characteristics is no different from the regular currency that we are used to using in life. They can be purchased on any specialized exchange, such as exmo.com. Bitcoins can be used to make anonymous purchases in online stores. They can also be used to make simple and fast payments to users around the world. This is due to the fact that the currency is not tied to any country in the world.

Bitcoins are stored in two ways:

Offline wallet

Users install it on a computer device. In some cases, it is encrypted. There is a possibility that when a hard drive fails or its owner forgets the password, it will be almost impossible to restore access to the funds on it.

Online wallet

Access to such a wallet is carried out not only from a computer device, but also from a mobile device at hand. It works on the principle of a web money service, Internet banking.

Using Bitcoin as an Investment

Investors started taking Bitcoin seriously in 2013. From time to time there is an opportunity to earn money using this type of cryptocurrency. The Bitcoin exchange rate chart makes it easy to determine the best time to make money using electronic currency.

Bitcoin is an intangible digital currency and a special type of payment system. You cannot hold this money in your hands, but you can pay with it when making purchases in online stores. Transferring bitcoins from user to user is sending encrypted data.

This cryptocurrency is based on two qualities - absolute anonymity and reliability of intra-system transactions.

Bitcoin (BTC) is not associated with banks, states, or gold reserves, since it is only a set of symbols obtained as a result of solving a problem. As conceived by the creator, its rate can only be influenced by demand, which is deliberately limited.

According to the created algorithm, the number of BTC cannot exceed 21 million units. Virtual coins appear gradually, and the process of issuing them should approximately be completed in 2140. The basic principle of the existence of this currency is the constant calculation of an encrypted function.

A user who decides to create new bitcoins installs special software on his computer. The ultimate goal of numerous settlements is to create a decentralized free currency. This process was called “mining” (mining). Mining is based on a cryptographic algorithm that converts data into a bit string.

Attitudes towards Bitcoin in different countries

Does cryptocurrency have a chance to be in circulation alongside real currencies or can it be treated as a game? There is no definite answer to this question yet. Most economists are skeptical about this money. They consider them a bubble, noting that the value of bitcoins increases due to speculation, but the volume of its actual use for trading does not change. Some financiers consider cryptocurrency transactions to be akin to a financial pyramid on a global scale.

However, if you can buy something with virtual currency, then to some extent it can be considered a means of payment. Thus, the German Ministry of Finance defined the status of Bitcoin as a “unit of financial accounting,” that is, it recognized it as a type of cash. In the United States, a federal court ruled that military-technical cooperation complies with the concept of money.

The first ATM is already operating in Vancouver, Canada, where you can exchange bitcoins for traditional national currency and back. It is noteworthy that in the first week of operation of the exchanger, transactions amounting to more than 100,000 Canadian dollars were made.

But in some countries the new currency is not recognized. It is completely prohibited in Thailand. China, which previously had a favorable attitude towards bitcoins, has banned financial organizations from any transactions involving them since 02/01/2014. But such a ban was not introduced for individuals.

The French Central Bank also spoke disapprovingly of cryptocurrency. The regulator issued a press release in which the new currency was called a speculative and risky instrument. In Russia, bitcoins were even called money surrogates. This was stated in the official statement of the country's Prosecutor General's Office. Representatives of the department stated that the official monetary unit of the Russian Federation is the ruble, and the use of monetary surrogates is prohibited by the current legislation of the country.

The reasons why financial regulators in certain countries do not consider virtual money to be legal tender are obvious. This currency does not have an issuer, so there are no formal grounds to classify it as securities or banknotes. It is also difficult to call it a payment system, since there are no licensed operators who manage the turnover and bear legal responsibility.

No financial organizations are involved in making payments in Bitcoin. Payments are made directly and it is not possible to cancel the payment. Information about the payment made by the payer is distributed throughout the network and is accepted by all other participants if the payment complies with the rules. An incorrect payment will be rejected. There is usually no fee charged at checkout, but it may be voluntarily paid to speed up the processing of the transaction.

Addresses are anonymous and do not contain information about their owner. The address consists of text about 34 characters long. It includes numbers and letters of the Latin alphabet. Bitcoin addresses can be represented as QR codes, as well as other 2D barcodes that can be read by mobile devices. A Bitcoin user can create multiple addresses on his own initiative.

Acquiring a new address involves creating a new key pair, and does not even require a network connection. Obtaining an address for only one correspondent or for one transaction enhances anonymity. The storage of funds is the wallet file located on the computer. They can be transferred to any user using a Bitcoin address.

Based on the properties of the Bitcoin system, it is compared to gold. The Bitcoin resource is limited: the more bitcoins are mined, the more difficult it is to mine further. The resource cannot be copied; theoretically, the value of coins only increases over time. But virtual bitcoin is different from physical gold. You cannot buy something twice with the same coins. Cryptographic protection and the system algorithm will not allow this. The advantages of cryptocurrency, in comparison with gold, include the speed of transactions. The operation can be initiated even from a mobile phone, being at any distance from the recipient, the payment will be made in a few minutes.

Hundreds of services and stores already accept Bitcoins as payment. There is an opinion that, just as at one time e-mail limited the functioning of traditional mail to a minimum, and Skype squeezed out telephone companies, Bitcoin will be able to take its place in payment systems.

Perhaps virtual money will compete with the usual money circulation. Traditional currency has long become an unbacked paper and is printed in any volume. Moreover, this process enriches some people and devalues the share of other owners of “candy wrappers”, of whom there are much more than the former. But it is still impossible to accurately predict the development of Bitcoin.

How is the Bitcoin rate formed?

The rate of BTC and other cryptocurrencies is formed on specialized exchanges, based on supply and demand, as befits any such asset. However, due to the rather low overall capitalization of the currency, it is heavily influenced by large players and mass panic. This is clearly visible on the cryptocurrency rate charts.

Bitcoin is absolutely not protected from speculation and is subject to strong volatility. For example, in 2013, its rate increased from $30 to $240 as a result of the banking crisis in Cyprus. Subsequently, quotes exceeded $1,240. In just 2013, the exchange rate increased by 9500%. But in December the “bubble” burst due to prohibitive sanctions in China. The rate dropped to $400. Since 2014, Bitcoin began to grow steadily. In mid-February, the rate reached $620.

Almost every owner of several tens of thousands of military-technical exchanges can, using the general confusion and excitement around what is happening, collapse or raise the market. Local and global Bitcoin pumps occur regularly and will continue to occur as long as people are willing to buy and invest their savings.

The BTC exchange rate, like any other currency, grows with increased demand. When players are ready to buy, it gradually increases. A sharp rise in the exchange rate does not so much mean an explosive interest in the currency as the arrival of a pump bull on the stock exchange.

Players with large assets (pumpers) can quickly buy sell orders and raise the rate to the maximum value in the shortest possible time. Pumpers create the appearance of a stable growth in the exchange rate, provoking newcomers to buy. By arranging a dump at the peak of activity, they dump their assets. The Bitcoin rate drops to its lowest levels.

Popularization of the currency through advertising and good news also causes the cryptocurrency to grow. The more users are informed about a product, the more they will want to invest money in it or play on the stock exchange. Bitcoin is advertised in all media around the world, which contributes to the growth of its rate.

Experienced traders are good at recognizing rate changes such as correction, loss and fall. A correction is a gradual increase or decrease in the exchange rate after a sharp fall or increase. However, if a correction in a certain period of time is observed on all exchanges with large trading volumes, this may mean that an instant loss is coming.

A drain is considered to be a sharp drop in the exchange rate of 15% or more. A drain is triggered by bad news, a dump or panic, such as restrictions related to cryptocurrency in China. By fall we mean a medium-term moderate decline, as a result of which the price of military-technical cooperation decreases by no more than 5-7%.

Correction and rebound (a sharp short-term change in the price of Bitcoin in the opposite direction) happen almost constantly. When playing on corrections and rebounds, the only serious problem is not knowing the minimum level of decline in the cryptocurrency rate (bottom) at which you should buy.

A drain (dump) is an action planned in advance by large players, which is impossible to foresee, but theoretically can be anticipated. A long-term dump, lasting several days, usually ends in a flush. As a rule, the upcoming leak is foreshadowed by contrived negative news, escalation of the situation in chats and the desire of pumpers to create panic in the markets.

It is quite difficult to predict the fall or rise of the Bitcoin rate without having serious assets. However, you can protect yourself from falling into a negative stream and avoid losing all your money. It is necessary to closely monitor dynamics, trends and news. Constantly analyze the situation, do not be afraid to make thoughtful decisions and even lose money, but at the right moment.

The cost of military-technical cooperation is not backed by any organization or government. Like other currencies, Bitcoin is worth something because people are willing to exchange it for services and goods. But its rate constantly fluctuates. Investing in Bitcoin is quite risky. At an early stage, the system lacks widespread adoption and is therefore quite vulnerable.

Supporters of the system do not deny that no one promises money, the nominal value of which would be provided and guaranteed by the state (fiat). The liquidity of cryptocurrency is not guaranteed by anything. Its non-speculative value is provided only by those goods or services that can be purchased with bitcoins, and does not depend on the global commodity supply. The more people want to use the new currency, the higher its rate will be.

Perhaps later, when Bitcoin is more well known, its stability may increase, but right now price changes are quite unpredictable. Investing in cryptocurrency should be carefully considered, with a clear risk management plan in place. The deflationary model of military-technical cooperation itself assumes an increase in the exchange rate over time, but this is not guaranteed by anyone. Therefore, you should not invest your last savings or significant amounts of money in Bitcoin.

There are two options for investing in bitcoins. In the first case, money is simply invested in Bitcoin in the hope that the exchange rate will rise. In the second, profit is obtained by speculating on fluctuations in the value of Bitcoin. Bitcoin speculation can only bring income to players who understand trading. The cryptocurrency exchange rate is characterized by exchange rate changes of tens and even hundreds of dollars per day. If the exchange rate movement is correctly predicted, the profit can be quite substantial.

Prospects for Bitcoin

Many doubt the viability of Bitcoin. Much in the system is incomprehensible and resembles the famous financial pyramids. In fact, the developers of the program are unknown. There are a variety of assumptions about who is hiding under the pseudonym Satoshi Nakamoto. The rules for issuing bitcoins gave clear advantages to the first users of the system.

In 2013, generating a block required half a million times more operations than at the beginning of the system. The task becomes more complex and requires much more resources and costs, while the reward has decreased. The differences from the pyramids in the system are, of course, significant. MMM-type structures are based on a referral program. Profit is made only when new participants are invited. Bitcoins are earned regardless of attracting new users. On the contrary, as the number of participants increases, mining becomes more difficult.

The number of participants in the Bitcoin network is relatively small, although it is the leader among cryptocurrencies. After the sharp rise in Bitcoin prices in 2011, other similar systems appeared: Namecoin, Litecoin (LTC), Novacoin. But they have not yet been able to achieve the popularity of Bitcoin. These currencies are traded against BTC and have the same rate movements. Many experts are distrustful of digital currencies and consider them a kind of pyramid scheme. Some suspect that these systems are “groping the way” to the creation of a new world currency that should replace the dollar, which has lost confidence.

Although the number of merchants willing to accept cryptocurrency is growing, its share in the global economy remains microscopic. This speaks of Bitcoin more as a fashion trend than as a real means of payment. It is possible that the number of virtual currencies may increase in the near future (there are already several dozen of them), but in the future there will be no more than three to five of them. Their rates will be extremely unstable, and the likelihood of recognition is low. It is impossible to say today whether Bitcoin will be among them.

The Bitcoin cryptocurrency has somehow quietly but firmly entered our lives. More and more stores already allow you to pay for goods and services with bitcoins. Interest in the currency is also fueled by hackers who, when hacking computers, demand payment in bitcoins for decrypting data. Therefore, today only the lazy are not interested in what the bitcoin cryptocurrency is and how to use it.

Bitcoins – what is it for dummies?

Bitcoin from English bitcoin is the progenitor of all electronic currencies. Its short designation is “BTC”. What this is in simple words is well described in one of the previous articles - “”. Also, in a separate article, the concept that underlies Bitcoin is discussed in detail. Therefore, we will not dwell on these concepts for a long time here. Let's talk about the features of bitcoin itself.

In short, Bitcoin is virtual money that exists exclusively on the Internet. They have no physical analogues, that is, you can’t touch them with your hands. And the price depends solely on existing demand. It is mined, like all other cryptocurrencies, using complex mathematical calculations.

Millions of computers around the world, both ordinary Internet users and those who create a serious business in this by assembling mining farms, are tirelessly working on this process. Its result is a continuous chain of blocks, each of which stores the latest data on mutual settlements between users.

And the main features of virtual currency:

anonymity;
transparency of transactions;
lack of regulatory control;
there is no owner who sets his own rules;
fraud protection - completed transactions can no longer be changed.

Anonymity

This concept is worth dwelling on more. The anonymity of Bitcoin is based on the fact that when creating a wallet and transferring money you do not need to indicate your personal data. Even the recipient of the bitcoins may not know the name of the sender.

However, based on the specifics of the blockchain, the entire database is publicly available. Anyone can see from which address and to which how much money was transferred. Anonymity means that the owners of the wallets are unknown. However, under certain conditions this anonymity may be revealed. For example, when making a particular purchase in an online store, when you disclose information about yourself.

Therefore, if anonymity is important to you, it is worth generating a new address for each transaction, which many wallets do automatically, as well as creating several wallets for different purposes.
Other methods that provide even greater anonymity include the use of anonymizers, for example, TOR, to hide the IP address, as well as so-called Bitcoin mixers when conducting transactions. The latter mix all transactions of different users, and then transfer the required amounts to the recipients' addresses, often with time delays. This prevents attackers from tracking transaction chains.

Let's go back in time

The bitcoin cryptocurrency appeared in 2009. It was introduced to the world by Satoshi (Satoshi) Nakamoto. Whether this is one person or a group of people is still not clear. The only thing that is clear is that it was a pseudonym. Like any innovation, few people believed in Bitcoin for a long time.

The story of the purchase of pizza in 2010 by programmer Laszlo Hanecz for 10 thousand bitcoins has already become the talk of the Internet. Then they cost almost nothing and Laszlo considered it a very profitable purchase.

Today, 10 thousand bitcoins is a fortune, considering that for one bitcoin at the beginning of spring 2018, the average price was 8-10 thousand dollars. And its market capitalization at that time was about 200 billion dollars.

If we consider Bitcoin’s path to such indicators, its price began to rise at the end of 2013 – then the price reached $1,200. Subsequently, there were dizzying drops to a couple of hundred dollars, and rises to 20 thousand.

Short story:

October 2008 - the new currency was officially introduced to the world;

January 2009 – the first block of the chain was generated;

January 2009 – the first transaction was carried out;

February 2010 – Bitcoin Market, the official currency exchange, opened;

February 2011 – 1 bitcoin cost 1 dollar;

July 2011 – Bitcoins in the amount of 25 thousand coins were stolen for the first time from a user’s wallet;

November 2012 – the reward to miners for one block drops from $50 to $25;

March 2013 – Bitcoin capitalization exceeded $1 billion;

November 2013 – one coin costs a then-record $1,242.

Official website of the currency— bitcoin.org.

You can often hear the question Bitcoin – whose currency is it, what country? The answer is a draw! Bitcoin does not belong to any state and is not controlled by anyone. This is a decentralized system, the data of which is stored on the computers of the users themselves.

And a network user from one corner of the planet can easily send any amount of bitcoins to another user, regardless of where he is located. The main thing is that everyone should have access to the Internet and a Bitcoin wallet.

Speaking of wallet

To work with bitcoins, you can create, for example, on the website blockchain.info or Bitcoin.org. You can also download and install the wallet program on your computer from the official resource. The first option is more vulnerable, because if sites are hacked and they gain access to wallets, your hard-earned bitcoins will cry.

Of course, they can hack on a computer, but it all depends on your vigilance and caution. In addition, the second option requires significant space to store the entire system database on the hard drive.

How to become the owner of bitcoins:

using mining;

buy from someone who has them;

receive in exchange for goods or services.

Bitcoin mining

Many people equate Bitcoin not with a currency, but with commodities such as oil or gold. After all, it is mined from the depths, albeit not real, earthly, but virtual.

Previously, anyone could mine bitcoins. It was enough to install the program on your computer and start mining new coins. They mined on processors, and later on video cards. Then ASIC boards (Application-specific integrated circuit) were connected to the case, the main purpose of which was to calculate hash functions using the SHA-256 algorithm, which is the basis of Bitcoin.

Over time, the level of complexity of calculations has increased many times over, and today Bitcoin is mined by professionals who have enormous computing power. This process is no longer possible for mere mortals on a home computer.

How many bitcoins will be released was determined in advance. As soon as the figure reaches 21 million, currency emission will be stopped. Therefore, Bitcoins are not afraid of inflation. They cannot be stamped in unimaginable volumes and thereby depreciate. It is expected that the last Bitcoin will be released by 2040. As soon as this happens, when generating new blocks, miners will earn exclusively from commissions.

Will the number of coins remain the same? - No! Because if a user loses access to the wallet where the coins are stored, they are lost forever and fall out of use. It is difficult to predict where this will ultimately lead. One thing is clear: with the loss of some coins, the value of the remaining ones will increase.

A new block in the chain is created every 10 minutes. The reward to miners for the generated block was initially 50 bitcoins. In 2012, it was halved to 25 BTC. And this year the reward is reduced to 12.5 coins. That is, the halving occurs every 4 years and so on until it reaches zero.

What is less than Bitcoin?

Just as a ruble or hryvnia is made up of kopecks, so Bitcoin is divided into satoshis, named after its founder. Satoshi equals 0.00000001 BTC. In other words, there are 100,000,000 satoshis in 1 bitcoin.

Disadvantages of Bitcoin

Anonymity in money matters is a pleasant thing, but it also has a downside. This is fertile ground for both money laundering and all kinds of fraudulent activities. It is not without reason that, as mentioned at the beginning of the article, hackers demand ransom from their victims in bitcoins.

Also, unlike Western countries, Bitcoin has not yet received mass distribution in the post-Soviet space. The number of places where you can pay with digital currency is extremely small.

What can you buy with bitcoins on the Internet?

Today you can buy anything online with bitcoin. As mentioned above, foreign stores actively accept BTC for payment. Even such giants as Microsoft, Valve, Dell do not disdain virtual coins.

You can also pay with Bitcoins:

in restaurants and hotels;

for mobile communications and the Internet;

when purchasing air tickets;

for utilities in a number of regions;

when renting a car and much more.

There are more and more places where virtual currency is accepted every day. On the website coinfox.ru/gde-potratit the map shows available options in any country of interest. Luxury goods that are offered for purchase with BTC can be viewed on the resource bitpremier.com.

Also, if necessary, bitcoins can be exchanged for real money or withdrawn to a bank account in a convenient currency using exchangers.

The entertainment industry is not far behind: in Las Vegas, strippers accept payment in bitcoins. And to make it more convenient for customers to pay, tattoos with the QR code of wallets are applied to the body.

What is happening with Bitcoin today and what will happen to it next

It was already mentioned above that, since 2013, the value of Bitcoin has been growing steadily, although with rollbacks. It went up especially actively in 2017 in mid-June, exceeding the mark of $2,900 per 1 BTC.

Some consider it just another artificially inflated bubble, which may one day burst. Others have expressed the opinion that Bitcoin will be replaced by another cryptocurrency that takes into account and corrects the shortcomings of BTC.

Thus, financial analysts predicted in the summer of 2017 that its cost would soon be 4 thousand dollars. And Bitcoin pulled out all the stops and reached 20 thousand by the end of the year, which surprised many. Therefore, forecasts that in the next 5 years it will reach 55, or even 300 thousand per coin do not look fantastic.

As for the legal status of bitcoin, the attitude towards it sometimes differs radically in different countries. For example, in Japan, BTC was already officially recognized as a means of payment back in the spring of 2017. In Germany, it was awarded the same status in February 2018. Moreover, according to the resolution, purchases paid for using Bitcoin are exempt from taxation.

China allows transactions with virtual currency only to individuals. South Korea legalizes international payments in Bitcoin. Bitcoins are prohibited in Ecuador, Bangladesh, Bolivia.

Bitcoin is a type of cryptocurrency, that is, non-bank money invented for online payments. There are more than 600 cryptocurrencies, but Bitcoins have recently become the most popular. Bitcoins were invented by a certain Satoshi Nakamoto, who received a huge fortune from his brainchild. We know practically nothing about this person, so the name continues to grow in legends.

In the fall of 2008, cryptographers received a newsletter explaining what virtual currency was all about. In 2009, Satoshi Nakamoto developed a version of the Bitcoin software and actively participated in the project. In 2010, the creator of Bitcoin left the community, remaining unknown. In 2011, Nakomoto wrote a farewell message, announcing his transition to another field of activity. Perhaps someday we will find out who Satoshi Nakamoto was, it is likely that a group of people worked under this name.

What is Bitcoin

Any money can be exchanged for bitcoins at the current rate at one of the special exchange offices. Bitcoin differs from other cryptocurrencies in mining, in which any participant becomes a gold miner, collecting gold crumbs in the ore. Van needs a computer with a graphics processor that can match 64-digit numbers. By generating random numbers, the computer selects the key to a block - a package of transactions for the exchange of bitcoins. Many players participate in the process at the same time, and the winner gets 25 bitcoins. Currently, 25 bitcoins are “born” on the network every 10 minutes, and by 2140 over 20,000,000 coins will be collected. The system is not subject to inflation and external influence. When the system was launched, $1 was worth 1,300 bitcoins; now the rate (see “”) has changed significantly.

Bitcoins can also be exchanged for regular money using an exchange service, for example, MtGox. This cryptocurrency can be used to pay for goods, hotel stays in the Howard Johnson chain, and in the BitElectronics store you can pay exclusively with bitcoins. The Bitcoin system is completely anonymous, since participants are named with random numbers and letters, which become the address of the electronic wallet. Theoretically, this means that you can safely buy something prohibited with bitcoins - drugs, weapons, etc.

Bitcoins are not tied to any state, so money can move around the world with virtually no costs. Cryptocurrencies in general are not, but a software product, the rate of which is determined by supply and demand, and is completely independent of the number of new investors.

You can make transactions with bitcoins without the participation of intermediaries, transferring money directly to the seller. Cryptocurrency coins represent unique hash codes. You can find out the Bitcoin rate at Blockchain.info. You can mine bitcoins by searching through sets of numbers, as described above. Then your income will depend on luck and computer power. The Bitcoin network is growing rapidly, so this “hunt for currency” is not an easy task. There are easier ways to mine, such as selling goods and services, buying bitcoins with currency, or trading with other “gatherers.”

Benefits of Bitcoin

Open source

You can find out the Bitcoin code and the principles of its existence. The operating algorithms of this cryptocurrency are identical to Internet banking, but information about the user is closed. Information about how many coins and when they were bought or sold is publicly available, but there is no information about the person who made the transaction.

Inflation immune

The number of coins in the system is increasing at a rate that matches the gold production in the world. The maximum number of coins is limited to 21,000,000. There are no forces, political or corporate, that could somehow influence the process, and inflation is simply impossible. It can be argued that cryptocurrency is more reliable than gold. In the foreseeable future, there will inevitably be a shortage of bitcoins, which means they will become more expensive. This is not a prediction, but a principle embedded in the Bitcoin development program. It is possible to change the course of events if almost all participants accept the changes - a clear manifestation of democracy.

Peer-to-peer network

In such networks there is no main server, and punctures operate on a peer-to-peer network, like torrents. Information exchange occurs between several programs. All user wallets make up the network. Clients have information about transactions and the amount of bitcoins in their wallets. Operations are performed by many mining servers. Banks, fiscal authorities, etc. do not control the exchange.

the freedom of action

Each client is free to pay at his own discretion, choosing a partner, currency and payment method. No one can control or prohibit actions, so transfers are possible to all parts of the world where there are holders of Bitcoin wallets. Users do not pay commissions to banks, taxes to the state, etc. There are small commissions in the system, but they are negligible compared to others - 0.1%. These percentages are sent to the “miners” of the cryptocurrency.

No boundaries

The system is guaranteed to work honestly, since payments cannot be canceled, coins cannot be counterfeited, or spent twice. Reputable brands, such as Wordpress, accept coins for payment. Online stores and companies are increasingly working with this currency.

Disadvantages of Bitcoins

Perhaps the only downside to Bitcoin is its exposure to news. Exchange rate fluctuations depend mainly on statements by officials of different states. In the short term, Bitcoins can exhibit high volatility. Bitcoins can fall by 10% per month, but an equal increase is also possible. When the bitcoin exchange rate stabilizes, the number of investments will decrease.

How to use and store bitcoins

You can use bitcoins for online purchases or make international payments, which is beneficial due to the independence of the cryptocurrency from any country.

You can install an offline wallet by protecting it with a password. However, if your computer breaks down or your password is lost, you may lose money. You can log in to your online wallet from your computer, tablet, and phone, so this option seems more convenient. Bitcoin wallets work similarly to WebMoney or Qiwi wallets. The disadvantage is storing data on a server, which can be hacked.

Investments in cryptocurrency can be very profitable during periods when the rate is growing rapidly, as happened in 2013. The story about the American in 2010 still excites minds. In a few years, he could get $5 million or many, many pizzas for his coins. It is quite possible that in the future cryptocurrency will become the only means of payment in the world, but we cannot predict how soon this will happen.

The popularity of the electronic currency Bitcoin grew rapidly in the second half of last year (2013), when its rate rapidly increased. Today for 1 BTC they give 23,879 rubles. The direct name of this currency is formed from two words: bit, which means a unit of information, and coin - coin.

Users are offered an electronic payment system that does not have a single center, since the entire process of its circulation is supported by the users themselves. In this case, the currency is stored on electronic media owned by system participants in the form of a specific cipher. The undoubted advantage of this system can be considered its autonomy, supported by a certain independence. Almost no one can influence it and, for example, block or ban it.

The very idea of Bitcoin came to mind from Satoshi Nakamoto, who six years ago presented to the public an article showing the advantages of a new electronic payment system based on cryptography. The main idea behind the idea was to create a currency that was not subordinate to any power structure. At the moment, Nakamoto is not involved in any way in the development of the system, and it is being developed thanks to independent developers united in a large group.

How Bitcoin works

Bitcoin turnover is based on pure mathematics. The issue of coins is carried out in accordance with mathematical formulas that are available to everyone and anyone can verify that they work based on a certain algorithm.

This cryptocurrency is placed on computers that keep the system running as a whole. In this case, complex mathematical equations called “hashes” are calculated. The bitcoin community is a computer network that facilitates all necessary transactions. Community members provide the power of their computer systems for a certain fee.

The current Bitcoin algorithm limits the production of coins, so no more than 150 coins can be issued per hour. At the same time, every 4 years the number of coins to be issued is halved. Based on this, by 2140 the maximum volume of coins will reach 21 million pieces. Each coin is divided into a fairly large number of parts, where the smallest (one hundred millionth) is called “Satoshi”.

Key Features of Bitcoin

Everyone can take part in the system.
Bitcoins are sent without intermediaries.
The user has the ability to create any number of wallets and details.
Transfers are anonymous and there are no commissions.
Refunds and blocking of transactions are not possible.
Bitcoins are stored on the user's computer or on some electronic media.

How to get Bitcoin

There are several ways to receive bitcoins.

Buy on specialized exchanges, for example, BTC.
Use the services of specialized exchangers, for example, ALFAcashier.
Buy directly from Bitcoin holders.
Get into mining.

Let’s take a closer look at the last point and try to figure out how you can get Bitcoin for free.

Mining Bitcoin

The word mining comes from the English variant mining, meaning the development of mountain deposits. Accordingly, miners are miners; as for our case, here we mean miners of virtual currency.

If we consider the issue from a technical point of view, then mining should be understood as the calculation of the so-called hash of the block header, which includes the header of the previous block, a random number and a translation hash set. If the hash value is less than the current target, a new block will be formed and the miner will receive 25 bitcoins. Otherwise, the next hash will be calculated.