What is Bitcoin?
Bitcoin is a digital and global money system currency in which encryption techniques are used to regulate the creation of units and verify the transfer of funds, operating under the control of no central bank, authority or government. Those new to cryptocurrency must explore the concepts of decentralization, mining, and blockchain to fully grasp why the technology and concepts are considered to have such an impact.
What Are Altcoins?
Any cryptocurrency similar to but not Bitcoin – is an altcoin, or an alternative to Bitcoin. These cryptocurrencies launched after the success of bitcoin and generally proclaim to be better substitutes for Bitcoin, but none have managed to prove such claims thus far. Most hope to replace or improve upon at least one Bitcoin component. Bitcoin was the first cryptocurrency and has the largest ecosystem. There are thousands of altcoins, and anyone can create one.
What is Decentralization?
The recording of transactions for how individuals spend money is always centralized – thus controlled by one entity or another. With decentralization, anyone can get a copy of, keep a copy of, and constantly update their copy of the transactions ledger – thus no one can alter transactions in the ledger or change the rules of use without a consensus of all the users.
What is Mining?
Only a total of 21 million Bitcoin can ever possibly exist, and out of that 21M, there are about 17M currently circulating. In order to make the remaining bitcoin available, miners must successfully mine blocks, and receive 12.5 Bitcoins for doing so. Mining is writing a “block” of transactions and then broadcasting that block to all the other miners quickly via the Blockchain.
What is Blockchain?
Underpinning digital currency like Bitcoin is the Blockchain technology which simply allows digital information to be distributed but not copied. Each individual piece of data can only have one owner, recorded in a digital ledger, and stored in a distributed network. Imagine a spreadsheet duplicated thousands of times across a network of computers that constantly updates and reconciles it.
What is Cryptography?
eCommerce and online banking already use cryptography. In Bitcoin, cryptography is used to make it impossible for anybody to spend funds from another user’s wallet or to corrupt the blockchain. Cryptography is the branch of mathematics that lets us create mathematical proofs that provide high levels of security. It can also be used to encrypt a wallet, so that it cannot be used without a password.
There are many online resources that provide accurate factual information about cryptocurrency, and there are resources which simply spread fear, uncertainty, and doubt (FUD). Once educated on the facts of the technology, it is easy to spot the uninformed who simply regurgitate what they hear from various other so-called “expert” sources. Having pored over online resources for well over two years, it is highly recommended that newcomers read these publications from two knowledgeable, respected figures in the Bitcoin ecosystem. There are many others, but Saifedean Ammous and Andreas Antonopolous do not “talk over your head” and their works make it easy to grasp the concept and impact of Bitcoin.
The Bitcoin Standard analyzes the historical path of money to the rise of Bitcoin, the economic properties that have allowed it to grow quickly, and it’s likely economic, political, and social implications. It is well-written, non-technical for the most part, and provides an understanding not often found in one publication.Saifedean Ammous
In this book, Andreas explains why bitcoin is a financial and technological evolution with potential far exceeding the label “digital currency.” He also has an extensive Youtube channel and few have the ability Andreas has to discuss the complexities of Bitcoin as a coder, but in terms everyone can understand. Highly recommended.Andreas Antonopoulos
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