Bitcoin 101: What are Bitcoins and How Do You Get Them?
Blockchain is a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network.
Cryptocurrency is any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions.
Crypto Media Hub helps Bitcoin, blockchain, and cryptocurrency-based businesses make their products and services accessible and appealing to customers. Part of marketing these crypto businesses is to help people understand the technology involved.
The following is a brief, introductory overview of Bitcoin technologies, followed by some useful resources to learn more about Bitcoin and stay up to date on its developments.
Bitcoin was created by an anonymous person, or perhaps a group of people, who used the alias “Satoshi Nakamoto.” Satoshi shared Bitcoin’s “white paper”– an explanatory document – in an online newsletter in 2008 and later published the open-source software for Bitcoin in 2009.
Make It Scarce
The primary innovation of Bitcoin was to impose the quality of scarcity on digital units.
Scarcity, or rarity, is a necessary quality for a currency. In the past, this has meant that money was tied to physical objects; measured in gold, silver, diamonds, salt, pelts, etc. In modern times, even after money was disconnected from gold and other physical standards, governments and central banks still limit the supply of money. However, the disconnection from a gold standard meant that governments and banks could distort money’s relationship to economic realities according to their own interests.
The advent of computers and digitization was valuable in many ways. They could be used to keep track of money, but they didn’t immediately offer technological advancement to money itself. A regular digital file is not a useful unit of currency because it is infinitely reproducible. This can be a useful feature, e.g. to be able to send a digital file, such as a JPEG image, to as many people as you like, or to make as many copies of it as you like. But this means that a digital file, such as a JPEG, isn’t very useful as a unit of money, for the same reason a dollar bill wouldn’t be useful if everyone could make unlimited copies of it.
Bitcoin imposed scarcity on digital units by limiting the units available only to computers that performed a particular equation laid out in Satoshi Nakamoto’s software. A computer’s performance of this equation is called “mining” for Bitcoin. Each time a computer performs a successive round of the equation, it derives one “Bitcoin,” i.e., one unique unit of the currency.
The primary innovation of Bitcoin was to impose the quality of scarcity on digital units
Watching The Watchers
Because Bitcoin’s software is open-source, any person can use their computer to access the software and perform the equation. Each computer, or “node,” in this network monitors all the other computers deriving Bitcoin from the software’s equation in a shared online ledger called the blockchain. This ensures that each unit of Bitcoin is distinct. There are not multiple copies of the same unit, so no one can spend the same Bitcoin twice; nor can new units be created out of thin air.
Because these computers belong to people throughout the world, rather than a central government or bank, they are called a distributed network, sometimes also called a decentralized network or a peer-to-peer network. The distributed network optimizes for the integrity of Bitcoin as a currency, since it is entrusted in a diversity of people whose only shared interest is in Bitcoin’s value and use, rather than being controlled by governments or corporations balancing their own interests.
Bitcoin is one type of cryptocurrency. “Crypto” refers to the encryption of the information on a network, which protects the privacy of its users. Since Bitcoin’s invention, other cryptocurrencies with their own distinct software and networks have been developed, such as Litecoin, Ripple, Ethereum, Dash, and Dogecoin.
Understanding Bitcoin and blockchain technology includes understanding its meaning and potential.
Bitcoin is a universal currency. Creating a wallet is possible for anyone with access to the internet, even those who don’t own a smartphone. This means that people experiencing poverty or even people completely neglected by modern economic infrastructure can participate in a global, connected marketplace with anyone else using Bitcoin or other cryptocurrencies. Bitcoin can also serve as a check against government currencies, whose price signals can become inaccurate from manipulation. Finally, the blockchain’s shared ledger offers refined applications of property rights which could improve processes within a variety of industries.
All of this information is merely a short introduction to Bitcoin and other cryptocurrencies. There is much more to learn.
Crypto Media Hub’s CEO, Tatiana Moroz, the founder of Crypto Media Hub, began learning and using Bitcoin in 2012. She offers a short course on Bitcoin in this video series. She explains cryptocurrencies in this introductory video:
You can learn how bitcoins can be purchased and more by watching the rest of Tatiana’s Bitcoin 101 course here: bit.ly/TMbitcoin101vids
Tatiana also hosts a regular show interviewing thinkers, business people, and innovators in the cryptocurrency space. Watch “The Tatiana Show” at TheTatianaShow.com.
Finally, here is a compilation of links, resources, and media to follow in order to learn more about Bitcoin, blockchain, cryptocurrency, and the developments in these technologies.
Read Satoshi Nakamoto’s white paper:
Bitcoin: A Peer-to-Peer Electronic Cash System
Check out more videos and resources here:
Andreas Antonopoulos Youtube
The Essentials of Bitcoin Security
Ever wonder how Bitcoin (and other cryptocurrencies) actually work?
BITCOIN RESOURCES (Lots of resources here!)
Guide to the Mechanics and Economics of Crypto-Currencies
Here are some some fun, friendly and cool cryptocurrency sites:
Deep Web (Movie) (Free with Amazon Prime)