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Home / Uncategorized / Bitcoin for Dummies

Bitcoin for Dummies

When I first heard about Bitcoins, the question I asked was: Can I become a millionaire with Bitcoin trade?

I’m still not sure about the answer, but I find it valuable to inform people interested in technology about the Bitcoin concept.

Bitcoin is basically a virtual currency invented in 2009 by a mysterious person or group who adopted the pseudonym Satoshi Nakamoto.  Bitcoin is not something solid you can hold in your hands.  It’s made of bits.  Owners can store their Bitcoins in virtual “wallets”, which are identified by a series of letters and numbers.  Anyone can view these wallets, yet the owners’ identities are kept private.   Once you have your Bitcoins, you can use them to buy and sell a broad range of items including actual goods such as a cupcake in a restaurant, a computer from an electronics shop or a hotel room in California.

Affected by the financial crash in 2008, Nakamoto wanted to create a currency, unlike any other established currencies, that would be independent of government or central bank, so that a person’s money could be secure from the machinations of politicians and bankers. The Bitcoin transactions are peer to peer, but in order to avoid fraud, every transaction of every single Bitcoin is tracked and publicly recorded.

There are around 11 million Bitcoins generated so far. Now comes to real question: How can you get one? There are various ways that enables you to acquire Bitcoins.  Here are some examples:

– buying on Bitcoin Exchanges

– mining them by using highly sophisticated computers to compete against others to solve complex math problems and win the Bitcoins, released every 10 minutes

– trading them for traditional currencies

– buying from someone who already has them

– accepting Bitcoins as payment for goods or services

– visiting sites that provide free offers

I tried the last option during my first interaction with the Bitcoin!  It’s sort of a seed money that helps you grow your business.

Let’s now take a look at the reasons why this virtual currency has become so popular recently…

One of the main reasons is the soaring value of the Bitcoins.  Moreover, one used to be able to buy a Bitcoin for less than a cent, but during the last couple of months a Bitcoin was at around $260.  The value is plunging between $30 and $100 these days.  The currency as a whole is now valued at between $1 billion and $2 billion.

Another reason for the recent increase in the popularity of this currency is the economic crisis in Cyprus.  Due to the regulations of the government and the announcement that the government would take money out of savers’ deposits, the Cypriots sought alternative methods of acquiring and spending money or in other words creating purchasing power.  The fact that people mistrusted the government and the banks, but trusted the Bitcoin system is very interesting.  Those that are vulnerable from the government’s financial status have suddenly relied on a decentralized currency where anonymous parties trade virtual money.

A third reason regarding the increasing use of Bitcoins is the fact that it is open source. Entrepreneurs and small business owners see it as an alternative economy through which they can exist and even compete with businesses with much greater financial power.

Some of the early-adapters of Bitcoin have made millions.  The common feature of these people is that they are self-described libertarians who were attracted to the idea of a currency independent of government regulations.  There around 250 wallets with more than $1 million worth of Bitcoins.  Despite the millionaires, the over-excitement and the rush of the Bitcoin users make it risky.  Therefore, analysts say that people should invest in Bitcoins only what they can afford to lose.

I’m definitely a risk-taker and I’m considering playing around with Bitcoin in the upcoming days.  If I become a millionaire, I’ll be away on holiday.  If not, I’ll inform you guys about the results of my investment!

 

Pinar Bilgic
a novice poet who describes herself as an innovative and a creative thinker ; founder of wish-let.com; member of SOGLA (Social Entrepreneurs Young Leaders Academy); almost an entrepreneur

11 comments

  1. Really good idea! What about the inflation part? (which might bring the interest rates and so on…) I hope it won’t end up being the reflection of real monetary system…

  2. kelly fortenberg

    Where do they keep the record of Bitcoin transactions? Can we see it?

  3. Pinar Bilgic

    Hi Kelly! Every transaction is publicly logged. Anyone can see the flow of Bitcoins from address to address. Here’s a web site where you can view information about the blocks, addresses, and transactions created by Bitcoin: http://blockexplorer.com/

  4. so are you rich now? 🙂

  5. Hey! Thanks for the post 🙂 I downloaded a “wallet” but it took around 6-7 hours to just synchronize.

  6. serdar ertugrul

    the cyprus case is pretty interesting.

  7. i’ve been dealing with bitcoins for some time. but it requires a fast computer and a fast internet services for sure.

  8. Pinar Bilgic

    an interesting article on bitcoin – http://gigaom.com/2013/07/13/bitcoin-will-prosper-until-governments-or-banks-decide-to-crush-it-overnight/

    “Bitcoin has potent disruptive potential to the world banking system, and thus the governments that are supported by it.”

  9. bitcoin is visionary. it’s a good beginning for alternative economy.

  10. Pinar Bilgic

    Check this out: Is Bitcoin Responsible for Silk Road’s Success?
    https://medium.com/on-startups/a110a1ff399

  11. Have you ever thought about writing an ebook or guest authoring on other blogs?

    I have a blog based on the same information you discuss and would
    love to have you share some stories/information. I know my visitors
    would enjoy your work. If you are even remotely interested, feel free to send me an e mail.

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