Digital Currencies: Bitcoin Essays

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Bitcoin Bitcoin is a digital currency that was started in 2009. It is a digital representation of currency with no actual tangible representation. Bitcoin, commonly abbreviated as BTC or XBT, is distributed worldwide, decentralized digital money (also called cryptocurrency). It is decentralized, meaning it is not controlled nor backed up by any government, country, or individual entity. Unlike traditional currencies, such as dollars and euros, bitcoins are issued and managed without any regulation from any central government. Thus, it is more resistant to inflation and corruption. A Bitcoin derives its value basically from the demand and usage of bitcoins, similar to a stock. Bitcoin doesn’t derive its value from the government; it…show more content…
A block is where Bitcoin gets its security and trust. A block is like a ledger with a list of transactions that is made public for everyone to see. Together all of these verified blocks of transaction information are made public for everyone to see and verify for themselves. This makes everyone’s transactions pubic so no one can falsify how much bitcoins they actually have to bargain with. Mining is an essential function for the network to work efficiently and securely, and when individuals perform mining services, they earn transaction fees paid by users for processing transactions faster and newly created bitcoins (not previously in existence) from the network as part of the encrypted formula (1). These monetary incentives, attracts more and more people to start mining which in turn increases the security and transparency of the network as a whole. However, mining is no easy task. It is very complicated and competitive. It cannot be done by your average unemployed couch potato with his Acer laptop. The miners have to have the proper technology, experience, and time to process transactions, secure the network, and keep everyone in the system synchronized together However, new bitcoins are created at a fixed rate. As a way for Bitcoin to maintain or increase their long-term value and not continuously decrease like fiat money, there is a set finite limit to the amount of bitcoins to be created. The
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