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Operation and basic characteristics of bitcoins

Operation and basic characteristics of bitcoins

bitcoins qué son y cómo funcionan Every time we are more users who feel some curiosity about the world of bitcoins in particular, and criptocoin groups. There are many indications that lead us to believe that the paper money, as we currently conceive days are numbered, and sooner or later eventually disappear or evolve. Without going any further, today is not at all strange to talk about payment gateways like Paypal or other person unless you already have an account at an online bank like ING or Bankinter.

exchange, metals, paper money, electronic money … and bitcoins?

Looking back, we can see how based society simple exchange or barter transactions . Thus endowed with value to any product or service that could offer to the point of exchange for a kilo of potatoes for a chicken or labor in exchange for food in the field.

As part of the evolution and emergence of precious metals, the economy to another level where exchange were performed supply of goods, services or products in exchange for gold and silver . This factor has led to a new economic era in which they started minting the first coins in history.

The paper money of the eighteenth century which was based mainly on the gold standard, where a person can change their money to the equivalent value in gold came. But after several decisive in the history of mankind, as the crack 29 or the First and Second World War, made the gold exchange was made possible by the dollar, which led us to the economic system implemented in the 70s when the economy was regulated by a central bank.

To conclude this brief introduction to the evolution of money, we come to the modern era, in which there is a connection between the paper money (notes) and debit cards, checking accounts, etc. . Ultimately, all these developments led us to the era of electronic money, covering everything from online banking to criptomonedas as bitcoins.

What are bitcoins?

The bitcoins are a type of electronic money or criptomonedas, completely decentralized and therefore are not regulated by the Central Bank. Created in 2009 by Satoshi Nakamoto Dorian (Australian pseudonym Craig Wright), the Bitcoins are a new kind of money for which we transact and buy goods, products or services.

basic bitcoins

Then go further to this new form of payment, but there are some concepts that we have clear before continuing:

  • When decentralized currency does not require intermediaries and is based on the concept of P2P . This means that if a person A wants to buy an item for a person B, can perform such an operation without a third person or entity involved.
  • To store or keep our guard bitcoins have to have a purse or portfolio. To put an illuminating metaphor, we could say that we all have a portfolio where we keep our money (dollars, euros, …). Similarly, we have virtual wallet in which to save our bitcoins.
  • Based on the example of the dollar, we can see that this can be fractionated into lower value coins, to speak cents. Well, bitcoins can also be divided using the satoshis (1 Satoshi equal 0,00000001BTC).
  • There is a history of all the transactions that have been using bitcoins they called BlockChain (block chain formed by a network of very powerful and interlinked computers). This transaction log is public, automatic and ordered with the latest on the 1st transfers. In general, we can say that BlockChain would become the book of accounts of a company, in which are recorded all the money movements.
  • The bitcoins are called cryptocurrency because system to create them is based on algorithms and mathematical laws .
  • The bitcoins value is floating so you can appreciate or depreciate. To measure the value of bitcoins, the exchange rate is performed using the dollar. Today, the exchange rate of R $ 654.82 1BTC =

What usability and functionality have bitcoins?

As we have seen, main bitcoins utility is to be used as a medium of exchange . With this in mind, as the case may buy or sell any merchandise, product or service using bitcoins as payment method.

Some features of this cryptocurrency are:

  • instant Transactions bitcoin The transfer of a bag to another is immediate . At the time of the transaction and accepted, the receiver will see the amount transferred in your bag (may take a few seconds depending on the volume of committed transactions occurring at the time).
  • transactions are irreversible – From the moment you send bitcoins a bag to another, there is no option to cancel the transaction . Once you have done is done and there is no turning back.
  • anonymity between the receiver and transmitter – To make a transaction just need to know the address of the bitcoin wallet receiver. For the same reason, will never need to provide personal data as our name, postal address, etc.
  • Ability to send and receive bitcoins anywhere in the world without charge – for a transaction with bitcoin can transfer or receive money from one end of the world to the other and will be as fast and effective as if we were doing our neighbor.
  • The bitcoins are universal – In addition to everything said so far, we must add that bitcoins are internationally accepted , so we can send bitcoins from Spain to the United States, for example, without the need for any foreign exchange transaction

“With conventional money, we would have to change euros to dollars US and pay the corresponding fees “

Advantages and disadvantages of bitcoins

1. limited number of bitcoins

The amount of bitcoins on the market is limited . There is a condition sine qua non that says there will be a total of 21 million bitcoins. In turn, the last bitcoin all be extracted in the year 2140.

“In 2016 there are about 18 million Bitcoins in the market”

based on these data, the inaction of bitcoins is scheduled for every 4 years to halve the number of possible bitcoins to be discovered. The following chart will help us better understand this concept.

Evolución minería Bitcoins

mining bitcoins Process until 2140

2. Price volatility and the value the bitcoin

the bitcoins price is volatile and depends on the supply and demand there at all times. This results in a price bitcoin self-regulation, which, in turn, will always depend on users.

“These fluctuations in the price of bitcoin can be exploited to speculate”

are Bitcoins 3. exclusive property of the owner

our bitcoins are ours and no one can speculate with them except ourselves . It’s no secret or are discovering gunpowder, saying banks gamble and speculate with our economies. Speculation is a double-edged sword. If they hit their “predictions” perfect, but otherwise could mean bankruptcy and the consequent loss of our money

4. Bitcoins are lasting in time

The bitcoins can not be destroyed . The only reason bitcoins could lose utility, it would be a depreciation of the value. But in no case would disappear.

5. It is impossible to fake bitcoins

There are thousands of cases of counterfeit notes and coins anywhere in the world . From this point of view, today is impossible to fake bitcoins .

6. illegal activities

Because some of the advantages we have seen, as the anonymity or the speed of transactions many mafias or illegal businesses (drugs and prostitution as great exponents) use bitcoins as a payment method .

“Without some compelling data is impossible to link a specific business transaction with a”

7. the bitcoins transport is a minimum cost

contrary to what happens with the transport of gold, silver or physical money, the cost is very high bitcoins can be transported very easily . The main problem of any transport, resulting in cost, is the volume of the substance to be transported. From the moment the bitcoin is virtual transport costs is minimal.

“We can also access our stock anywhere in the world, so it is not compulsory transport the bitcoins”

8. costs very low or no maintenance

in a society that rise into the air, may surprise some that statement, but if have one or more Bitcoins bags is absolutely free and has no added overhead .

“Any database product usually has an additional expense, either with fees, maintenance fees or commissions”

9. losing our wallet password can be crucial

If you lose the password there is any chance of recovery with a number of keys that help us create our purse. But if this is the case you lose your password and do not have these keys by hand we can write off our bitcoins , since even BlockChain can provide us with a new password.

“By creating a Bitcoin wallet, you should print or key password recovery aim to provide us”

How can we get bitcoins?

There are several ways to get bitcoins, some free and others require one or more investments. Some of them are as follows:

Originally, the taps were sites that were used to promote bitcoins, whose purpose was that anyone in the world could get its first free satoshis. Later, most of the taps and all pages paid to click, advertising live and pay in small fractions of bitcoin for each ad visualize. 

Mining is the key factor and essential part of the network bitcoin. In general terms, the bitcoin mining is the connection of several computers with high processing power (ATI) by mathematical algorithms that are discovering a series of codes, thereby resulting in the discovery of new bitcoins.

“In 2009, it was possible to undermine our computer, but nowadays a computer explicitly prepared for it is necessary”

requires resources that are not available to everyone because it requires one or more powerful computers and light consumer spending is quite high.

Using an analogy to gold mining or coal mining bitcoin mining is offering a reward and reward the work done. This will require mining by the year 2140 the last bitcoin is issued.

An alternative to mining is mining in the cloud or Cloudmine, which can make a small investment and rent processing power to undermine criptomonedas. Profitability is much lower than in mining, but offers the possibility of undermining all those people with lower economic capacity.

  • buy, sell or make an exchange

already know the possibility to buy any currency in the world, or failing that, to make a currency exchange. This same operation is possible thanks to bitcoins pages dedicated to the exchange of criptodivisas or exchangers. Applying a commission involved, we can change any bitcoins currency and vice versa.

Past, present and future of Bitcoin

With the entry into bitcoins economic system scene has evolved to another level. Everything indicates that economic future of the world is increasingly focused on criptodivisas , although no one can guarantee that the Bitcoin sieguirá being the main currency.

“With the right tools and knowledge, any user can create their own cryptocurrency”

The creator of bitcoin it was a pioneer in this field and over the years have been creating new criptomonedas order to improve the Bitcoin system, which as we have seen have things to correct. Despite these shortcomings, we must consider that bitcoins are so embedded in the economy every day, which since 2014 publicly traded, are being implemented Bitcoin ATMs and there is even debit cards linked to a bitcoin exchange (the which allows us to purchase and pay with that card).

Currently, according to the website coinmarketcap , there are over 700 criptomonedas, each with a value and specific characteristics. From the point of view of market capitalization, the top 5 criptomonedas are as follows:

  1. Bitcoin (BTC)
  2. Ethereum ( ETH)
  3. Steem (estimated)
  4. Wave (XRP)
  5. litecoin (LTC)

personal opinion about bitcoins

the way I see things, I think a world without paper money is approaching. But not only stay there, but payment gateways like Paypal will be forced to adapt to new times or disappear.

Sooner or later large corporations will join this social trend . Many banks are laying off much of its staff, closing physical offices, … which ultimately means lower costs and decant the balance, shamelessly, online banking did.

“If large corporations such as Apple, Microsoft and Facebook will create a criptodivisa itself would be almost immediate acceptance around the world”

Now you see, the trend is what it is and society chose an economic model in which, among other things, the money is yours and is not in the hands of others.

were well above some aspects of bitcoins, but hopefully this beginner’s guide has been helpful to you and your doubts about this have been cryptocurrency eliminate with ?

Bitcoins guía para principiantes