If you're here because you've heard about Bitcoin and want to learn a few things, or if you've never even heard the term 'Bitcoin' you'll feel welcome. I'm going to describe, in the simplest of terms, what Bitcoins are, how to get started with them, and have a few guides on how to get your first coins!
What is Bitcoin?
The easiest way to describe Bitcoin, and to learn the extraordinarily basic properties of Bitcoin, it'd be best to watch this informative video. However, I'll have a small summary posted after the link if videos aren't your thing.
Bitcoin Info Video
Bitcoin is decentralized, which means there are no banks, governments, or groups of people that own Bitcoin. It is peer-to-peer (P2P). The Federal Government can't "print" more Bitcoin, nor could they destroy it. The creation of a Bitcoin relies on mathematics, and is created based on proof-of-work "mining".
What is Bitcoin Mining?
Bitcoin Mining Info Video
Mining Bitcoin can be done by anybody with a computer, a program, and/or a specially manufactured mining rig. Whenever miners solve Bitcoin-related algorithms with their machines, they're awarded a certain number of Bitcoin. This creates an inherent interest, and incentive to mine Bitcoin. Also, the miners of Bitcoin, and the solving of their algorithms, is how every other Bitcoin transaction is confirmed. If you have more miners mining it makes the entire Bitcoin network more secure, and the confirmations on Bitcoin transactions faster. Also, as more Bitcoin are mined, the algorithms become tougher and tougher to solve, which means Bitcoin's overall growth is stymied by its own code. This is a positive outcome though, as it allows easily measured growth over the course of years, instead of the entire Bitcoin protocol flooding the market all at once.
All Bitcoin transactions can be seen on a public ledger known as the "block chain", which is the real genius behind Bitcoin.
What is the Block Chain?
To understand the block chain, I'll first borrow this definition of a "block":
A block is a
record in the block chain that contains and confirms many waiting transactions. Roughly every 10 minutes, on average, a new block including transactions is appended to the block chain through mining.
Block Chain:
The block chain is a
public record of Bitcoin transactions in
chronological order. The block chain is shared between all Bitcoin
users. It is used to verify the permanence of Bitcoin transactions and
to prevent double spending.
Double spending is basically copy/pasting Bitcoin, which would allow any single user to spend the same Bitcoin as many times as they want. Imagine having $1, and buying a soda with it. With double spending you could buy a soda with $1, and still keep your dollar. Sounds great if you're the one with the infinite spending money, but double spending would mean Bitcoin is worthless, but because of the mining of blocks, and the public ledger block chain, double spending isn't a worry.
Now that you understand some of the finer points of what Bitcoin is, and how Bitcoin comes to exist, let's move on to my next post about how to purchase Bitcoin.
