The easy answers to the hard questions!

WHAT IS BITCOIN?

The easy answers to the hard questions!

WHAT IS BITCOIN?

Bitcoin is virtual cash that can be used among friends or between customers and merchants – anywhere ordinary money is spent or exchanged. It exists as digital information rather than physical money: Each bitcoin is a string of mathematically generated numbers. This sequence can be printed on a piece of paper or embedded in a coin, as a physical reminder, but it is the number, not the object (as in other currency), that has value.

1001010100100110010101010011010100100101010010100101

HOW DOES IT WORK?

One simple explanation is that there is software for

various access points, whether they are a computer

or a smart phone. The idea is to transfer digital

information between two digital wallets.

HOW DOES IT WORK?

After downloading the requisite phone application, users follow the

app's instructions. Typically, a merchant has a QR code that can be

scanned with a smart phone camera. This is his public address.

The user sends Bitcoin, or BTC, using the app instructions. The user's

digital wallet then will show fewer BTC and, voilà, the merchant's will

show more.

IN THE BEGINNING…

Bitcoin emerged in 2008 as the mathematical project

of Satoshi Nakamoto, a pseudonym for ...?Essentially, it is a software code set up to generate Bitcoin. A process known as mining actually propagates the new numbers, and when the numbers are used, they are permanently stored in what is called the blockchain. If that sounds confusing, don’t worry. It is.

HOW DO YOU KNOW…

The most common question is, “But how do you know

how much it’s worth?” It’s like any other

marketplace… Where there is a demand, or other

extenuating circumstance prices are typically high.

Take a look at cigarettes, in New York you would be

lucky to get a pack of premium brand smokes for

$15, but here in Texas they are only around $7 and in

West Virginia, less than $5.00

With no governing authority or central bank in the

way there are no set prices or artificial inflations by

the random injection of currency into the system.

This also means no debilitating fixed exchange fees

or excessively high transaction fees.

HOW DO YOU KNOW…

“But it’s just a computer program, so someone writes

a virus and wipes it all out!”

Yes and no. While you can certainly be the victim of

theft when it comes to Bitcoin, just like cash, It has

never happened by hacking the core code. And

believe me, they have tried! At this point in time the

only real way it could happen is through what is

called a 51% attack.

HOW DO YOU KNOW…

In the most basic of terms a 51% attack would mean

someone amasses enough hashing power to comprise 51%

or more of the total global hashing power.

At that point they could attempt to inject erroneous

calculations into the system to “magically” make Bitcoin

appear. BUT, all transactions have to be validated by the

network, so while this might work for a few seconds,

ultimately the foreign coins would be rejected very quickly.

SO HOW DO YOU MAKE BITCOINS

The original protocol calls for a top limit of 21

million bitcoins – and the first code allows new

bitcoins to be created, or mined, at a rate that halves

every four years until 21 million is reached. Miners

use computing power to solve mathematical

problems and are rewarded with bitcoins as they do.

A hash or hash rate is a measurement of that

computational power.

While 21 million coins doesn’t seem like a lot each coin can be dividedTo the 8th decimal meaning you can pay someone with .00000001 BTC Which allows for a currency well into the trillions which can easily support a global economy.

DO THE RESEARCH

Don’t take my word for it. Do a Google search on your

own for news related to Bitcoin. You’ll find all you

need to know and more. It has recently hit more than

$900.00 per coin and was endorsed by the U.S.

Congress as a valid form of exchange; by China and

retailers around the world! Even Richard Branson will

be accepting them for a ride into space!