A epistel attempt at explaining the madness of cryptocurrency

A brief attempt at explaining the madness of cryptocurrency

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Cryptocurrency may spil well be called “cryptic currency,” because it’s nowhere near spil effortless to figure out spil typical money. For one, while most of them (and yes, there’s more than one) have names that end with “-coin,” they don’t usually come te physical form. Yes, they do represent money ter digital form, but using them is a bit more complicated than digital payment services like, say, PayPal or Google Wallet. Also, unlike banks and online services, they’re decentralized, with no single governing assets overseeing and verifying transactions — there’s a reason why bitcoin wasgoed (is?) the currency of choice for black market regulars.

Bitcoin (“BTC”) isn’t only recognized spil the very first cryptocurrency, it’s also the poot for every other crypto-coin that’s popped up since it wasgoed formally introduced te 2009. “Satoshi Nakamoto” (the pseudonym used by the person or the group of people who created bitcoin) designed it spil a peer-to-peer system that relies on users to keep working. Also, all transactions are recorded on a public ledger (called “block chain”), so even tho’ no name or email address is associated with an account, the system’s not entirely anonymous.

Similar alternative currencies go after that structure even now, tho’ they add features of their own, spil well. Litecoin, for example, wasgoed designed for swifter transactions (the average confirmation time for each bitcoin transfer is 11 minutes spil of January 2015, because it has to be verified by a miner — more on this straks), while Quarkcoin promises a more secure system. Others rely on their novelty more than anything, such spil Dogecoin, which likely appeals most to ventilatoren of the (te)famous doge meme and Coinye Westelijk that wasgoed gravely a thing until Kanye Westelijk went onstage to court and didn’t let it finish had it shut down.

Now, if you’re wondering if you should invest ter any zuigeling of cryptocurrency, the reaction isn’t ordinary: It depends, spil their values fluctuate quickly and widely. Take for example, bitcoin, which reached its current all-time high of $1,242 vanaf coin te November 2013, whereas each BTC wasgoed worth only around $200 a few months before that. Spil of this writing, bitcoin’s value is back to $210, and who knows if it’ll everzwijn be worth more than $1K apiece everzwijn again. Point is, if you project on investing your life savings on bitcoin or any other alternative, you’ll have to explore it closely and prepare for the consequences. Instead of getting your kids’ collegium tuition or your retirement fund when you’re ready to liquidate, you might end up with but a fraction of what you originally invested.

Still want some first-hand practice with thesis crypto-coins anyway? Wij waterput together some basic informatie you should know before getting embarked, using bitcoin spil the reference currency.

HOW TO GET CRYPTOCURRENCY

Thesis are some of the most common ways to get bitcoins or any of its alternatives:

  • You can use one of the many exchange services that buy and sell BTC for US dollars/whatever your local currency is. This is obviously the easiest way to get began, spil all you need to do is choose among one of the many options available. Some money changers are pretty rigorous and will ask for a copy of your ID and proof of address, but that’s still lighter than the other two ways below.
  • You can sell goods and services through bitcoin marketplaces. A quick Google search will point you to online buy-and-sell websites that accept or specifically ask for bitcoins for transactions.
  • Ultimately, you can “mine” for bitcoins. This one isn’t something wij’d recommend if you’re fresh to cryptocurrency, spil you’d need specialized hardware (ASIC miners, te particular, which are USB-powered devices that don’t do anything else) to do it for you. “Mining” is the process of verifying transactions and adding them to the public ledger or the block chain, te bitcoin’s case. Te addition, it’s the only way to introduce fresh bitcoins into the circulation, spil miners are rewarded for every block of transactions they process.

Spil wij mentioned earlier, cryptocurrencies aren’t regulated by any institution, so there’s no bankgebouw that would print more money when the need arises. Take note, however, that the system makes it tighter to mine the more blocks of transactions are processed. The prizes were also designed to be cut ter half every four years to prevent inflation and to keep the total number of bitcoins ter circulation to 21 million at most. At the uur, the prize for each block mined is 25 BTC, and the process has become difficult to the point that you’ll now have to join a mining pool if you actually want to earn anything. A mining pool combines the resources of a group of people to mine bitcoins and divides the stekje amongst the members.

Sound complicated? Well, mining isn’t exactly a ordinary concept. Witness the movie above very first, then let’s attempt to visualize the idea: Imagine that you’re an actual miner with a pickaxe ter your forearm, and there’s a big boulder ter vuurlijn of you with golden coins hidden ter its very center. To get to the gold coins, you’ll have to chip away at the boulder: The better your equipment is, the quicker you can go. Unluckily, you’re not the only one attempting to get to the center of the boulder, and it’s a wedstrijd inbetween you and other miners with better, more high-tech pickaxes. That’s why the best way is to pal up with other people to get to the very center of the boulder and divide the spruit. Spil time goes by, however, you’ll notice that boulders become tighter to pauze and the gold coins ter the center become fewer ter number.

That’s but an oversimplification of the process, of course, but it should give you an idea of how it works. The boulder ter this case represents a block or a big bunch of transactions miners have to verify and solve. Each lump of rock a miner chips away represents a verified transaction, and the gold coins represent the bitcoins a miner can earn and introduce into the circulation.

WHERE TO STORE CRYPTOCURRENCY

Before you exchange your hard-earned dollars or mine for some BTC, tho’, you’ll very first need a wallet to keep your virtual money te. Within thesis wallets, you’ll find your secret codes or keys needed to be able to spend your coins, spil well spil an address (which functions similar to a PayPal email, except it’s a long code of letters and numbers) that you need to give people sending you money. Some wallets can even generate several addresses so you can give a different one to every person you’re transacting with spil an toegevoegd precaution.

There are many types of bitcoin wallets, including desktop programs and mobile apps, which are ideal if you want to pay for purchases te brick-and-mortar stores. Some of them can be accessed online, but te case you end up with an inordinately large amount of bitcoins, you’re likely better off keeping most of it offline te what’s known spil “cold storage.” While bitcoins stored online are more lightly accessible, everything stored offline is much safer. When exchange service Bitstamp wasgoed hacked ter early January, the thieves got away with “only” $Five million, because most of the company’s reserves were stored offline.

Wij kept telling earlier that bitcoins don’t have a physical form — well that’s still true, but te addition to apps, programs and online services, another way to store the cryptocurrency is through “paper wallets.” There are businesses that will print your address and private key spil QR codes on a card. Want something fancier than a paper card? A webstek called Casascius sells actual physical bitcoins (which you can see te the top photo) with your address and private key hidden underneath a hologram. They used to come loaded with spendable BTC, but after being questioned by the feds, the possessor has determined to sell them empty — you’ll have to find a way to flow the coin on your own.

For those who think paper and flashy coin wallets are too risky, there are special hardware wallets that promise to keep your money secure while also being lighter to access, such spil that prototype bracelet by MEVU. Some physical wallets even take on an unusual form, like a CD or a vinyl encoded with private keys spil audio files.

SECURITY BREACHES AND CONTROVERSIES

Also, because exchange services keep part of their reserve te online wallets, fairly a few companies were hacked ter the past year. One of the most high-profile bitcoin-related security breaches happened to Japan-based exchange company Mt. Gox, which lost 850,000 BTC and ultimately had to shut down. According to the latest informatie from authorities ter Tokyo, it could have bot an inwards job. Mt. Gox CEO Mark Karpeles has recently bot accused of being Silk Road’s mastermind who hid behind the name Fear Pirate Roberts, something that he categorically denied.

Speaking of naming people spil the face behind pseudonyms, Newsweek published a chunk te 2014, pinpointing Japanese-American and California-native Dorian Nakamoto spil the Satoshi Nakamoto. Nakamoto also denied being bitcoin’s creator and even raised a legal defense fund to sue the publication spil the publicity has evidently caused a major inconvenience and hurt his family.

Want to know more? Wij have a more in-depth lump about bitcoin, if you’d like to dig deeper into currency and the technology behind it.

Related movie: Persona Five – Price [8-bit; VRC6+MMC5]


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