Basic knowledge of Bitcoin and other digital currencies | Complete Introduction

Introduction to Cryptocurrencies: Basics about Bitcoin and Other Digital Currencies

Bitcoin (Bitcoin) recently brought other digital currencies to the market and became the most talked about investment product on the market. Besides the record-breaking price increases and historic highs, the controversy never stopped. Whether these virtual currencies are pure. Is it guesses a bubble or a star of tomorrow? Will the government officially legalize this? Will it become the main currency in the future?

Is it also affected by the cryptocurrency boom? The following is something to read to get started when investing in virtual currencies.

 

1. Introduction to the cryptocurrency

A cryptocurrency is an electronic or virtual currency that provides privacy through encryption. The basic procedure is the same for covert communications on the Internet, such as browsing websites or sending emails.

Every transaction is executed in encrypted form. The sender and recipient are only identified by a series of numbers, and the flow of each Bitcoin coin is stored in a general ledger called the blockchain, ensuring the security of every transaction.

You can use cryptocurrency to shop and invest in it, and its value may rise or fall in response to market changes. The cryptocurrency is very similar to the real currency, and there are many platforms in Hong Kong that accept Bitcoin for consumption.

However, unlike traditional currencies, cryptocurrency transfers do not have to give a name or go through intermediary channels such as banks, merchant accounts, or payment systems. The transfer is anonymous and private, and the transaction fees are low (even if no transaction fees are charged).

 

2- Cryptocurrency developer

Bitcoin was invented in 2008 by a computer programmer under the pseudonym “Satoshi Nakamoto” and is currently the most popular of the approximately 780 cryptocurrencies circulating around the world. Bitcoin was launched in 2009 at a price of $ 0.008 per coin.

Satoshi Nakamoto explained why Bitcoin was invented on his blog in 2009: “I have developed a new, open source, and comprehensive electronic currency system called Bitcoin. This system completely eliminates centralized or trusted issues. Central server or trusted party, because everything is trust. Instead. Depends on cryptographic safeguards. ”

“The main problem with traditional currencies is that they need confidence in order to function. The central bank should not allow the currency to depreciate and gain confidence, but the date of legal tender is fraught with situations that violate this trust. Banks also gain confidence. They hold our money. We transfer it,” Satoshi Nakamoto said. Electronically, but in a wave of credit bubbles, banks have lent heavily, leaving very little reserves. ”

Blockchain visualization: A block is an ever-expanding list of records that are linked through crypto technology and kept secret. Each record is immutable and can be validated by the entire blockchain community rather than by one central authority.

 

3- Creating a cryptocurrency

Unlike regular currencies, a cryptocurrency is a decentralized virtual currency produced by a process called “mining”, not by the central bank or government.

 

Users (all of them referred to as “miners”) can use computers to solve complex mathematical operations to produce bitcoins, and the more miners, the more difficult it is to generate bitcoins. According to information from 99Bitcoins, in 2009, a miner could mine around 200 Bitcoins in a few days, but in 2014 it would take 98 years to mine 1 Bitcoin.

Miners can also perform troubleshooting procedures to check other people’s transactions so that they can earn fees or bitcoins. Therefore, each transaction takes at least 10 minutes to process, and the higher the number of conversions and transactions, the slower the processing process will be.

Just like public currencies, cryptocurrencies are difficult to produce and have limited supply, so they are valuable. Satoshi Nakamoto confirmed that there are only 21 million Bitcoins in circulation.

There are currently around 16.7 million Bitcoin in circulation and its value is around $ 16,000, which is equivalent to twelve times the amount of gold per ounce ($ 1,300). According to information from CoinMarketCap, the current overall market value of cryptocurrencies is around $ 28.2 billion.

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