Monday, 3 August 2015

A short note about Bitcoin

Have you heard about a currency which you can mine? If not this is a new form of currency which you cannot touch but will get you everything which money can buy! This is called Bitcoin, the first example of a growing category of money known as cryptocurrency.

What is Bitcoin? 

Bitcoin is a form of digital currency, created and held electronically. No one controls it. Transactions are made without any bank's involvement. There are no transaction fees and no need to provide your real name. It is not backed by gold or credibility of any government. Bitcoins aren't printed, like rupees or euros but they are produced by lots of people running computers all around the world, using software that solves mathematical problems.

How to acquire bitcoin? 

There are different ways to acquire bitcoins. Here I am listing out a few:

Buy Bitcoins  


Simple as it says. You can buy bitcoins from somebody who have it or from a Bitcoin exchange by exchanging any fiat currency (USD, INR etc). While writing this article the price was 1BTC = $284.85 Surprised!?!

Earn by accepting Bitcoin as a payment for your product/services.

The best and easiest way to earn Bitcoins. However, there is a risk factor. You have to believe Bitcoins. In fact the Bitcoin value is based on faith. Sounds crazy huh!? You will get a clue from the below question and answer: 

Qn: What really backs the U.S. Dollar?

Ans:  U.S. Dollar is backed by the "full faith and credit" of the US Government, it means the labor, wealth and property of "The American People"!

Mine Bitcoin

Mining is the process by which new coins are created - tell your computer to solve a set of difficult mathematical problems and success is rewarded with bitcoin.

Sounds simple? 

No, it is not that simple! There are so many hurdles - mining hardware, software, complexity of the mathematical problem, processing power, electricity charges etc. And the fact that only a finite number of bitcoins can ever be created (21 million, to be exact) :-(

The other side of Bitcoin is something different. Nobel Prize winning economist Paul Krugman has even written an article 'Bitcoin Is Evil'- the topic explains the content. Either it is good or evil. Let's learn something new - just keep in mind "Ignorance is an evil weed".

Curious about Bitcoins?! Here are some good starts , and ask Google uncle ;-)