The cryptocurrency craze is in full swing and it’s a matter of time before every person on the planet knows what Bitcoin is. What people may not realize is that this IT currency revolution, like how to open car wash coin vault, has grown to involve many more currencies like Ethereum and Litecoin. How an individual cryptocurrency works varies depending on the type, but generally speaking all of these digital or virtual currencies are designed to be decentralized and secure.
The most popular form of cryptocurrency, Bitcoin, was created in 2009 by a pseudonymous programmer who remains unknown after releasing the code as open source software.
1. Bitcoin is created and held electronically.
A person has to buy bitcoin from an exchange, which is a company that specializes in buying, selling, and transferring Bitcoin. Once the transaction is complete, the person has bitcoins. There is a finite amount of bitcoins available for use, and the creator of Bitcoin set a limit on the number that could ever be created. The creator also made sure there would never be more than 21 million of them, so as more and more people around the world use it, the value goes up, theoretically to infinity.
2. Ownership is safe because transactions are verified by network nodes
The transactions are stored in a global ledger called blockchain which is accessible everywhere. The network nodes record transactions in an open ledger through cryptography so that the information cannot be tampered with or altered by any one person or computer.
3. Transactions are anonymous
While the transactions are stored in the ledger, none of the parties involved can be identified. The person sending bitcoin and the recipient remain unknown to each other and it isn’t possible to reverse a transaction once it’s been added to the blockchain. It’s also not possible for a person to spend their bitcoins more than once because every transaction requires a signature from that person’s private key.
4. The creation of new Bitcoin is limited
Currently, blockchains are set up so that every 210 000 transactions will produce 12.5 new bitcoins in addition to transaction fees paid by users sending or receiving bitcoin transactions. It’s a predetermined limit that can never be changed in the system. The reward depends on how well the transactions are processed by the network. Generally, it is better to have more people transacting than less and this is why many Bitcoin users prefer lightweight clients like Electrum.
5. The amount of bitcoin can be increased
The limit on how many bitcoins can ever be created is tied to the amount of computing power behind blockchains holding them, and if more people buy into the system and make it more robust, this limit increases over time. This is why many people buy bitcoins now and store them in a wallet so that they can use them as a currency, even if the limit is not reached.
6. The ownership of bitcoin can be liquidated
A bitcoin can be transferred from one person to another and the person that transfers bitcoin to another person can claim their Bitcoin back by signing a message with their private key, which proves that they are the owner. This ensures that no one can spend their bitcoins again but still have access to them in the form of proof of ownership known as a paper wallet. In the case of a traditional bank, to get your money back would mean going to the bank’s headquarters and physically retrieving your account book. The downside is that the privacy provided by Bitcoin transactions is not as good because it requires you to provide a public address or wallet which can be tracked by anyone.
7. Bitcoin can be used for gambling
Gambling with Bitcoins is currently mostly unregulated, but it hasn’t stopped people from trying their luck with it in casinos around the world. Many casinos are starting to accept Bitcoin as a currency, and it’s easier to use than a credit card. Bitcoins can be easily purchased at an exchange and transferred to a casino’s deposit wallet where they can be used to play games in addition to cash.
8. Purchasing goods is not difficult
Bitcoin can be used for purchases with retailers that accept it by simply transferring the amount over from your exchange wallet. The retailer you’re doing business with will then transfer the bitcoin from their wallet back into the exchange, liquidating your holdings and converting them back into whatever currency you began with.
9. Bitcoin can be mined
Because there is a finite number of bitcoins and they are built on a blockchain, there is no way to create more of them without the help of other computers in the network. This is how miners work. They help maintain and secure the network by doing this work for free, or for a fair reward in bitcoin.
While many people associate Bitcoin with crime and illegal activities, it is actually a digital currency that can be used for legal purchases, including poker. While it may seem confusing at first, the underlying blockchain technology of the network, which is publicly accessible and holds the cryptocurrency in an encrypted file, is simple enough for any beginner to use. Whether you are looking to use it for online betting or just want to get a better grasp of this IT currency revolution, you should definitely do some research on how cryptocurrencies work and whether they are safe in your jurisdiction.