Bitcoin is the most famous crypto currency in the world. Even grandmothers in the remote villages know about it. She is already paying heavily on the Internet and even in some stores and cafes, and the very capitalization of Bitcoin today is more than $ 100 trillion. This coin has long ceased to be of interest exclusively to enthusiastic people. Virtual money step by step come into the life of ordinary people.
Everyone has heard about bitkoyne, but far from everyone understands exactly what is its essence, simplicity and complexity at the same time. Let’s figure out what this crypto currency is and how to start using it.
History of the coin
Knowing what happened to koin was important. Based on the history and fluctuations of the exchange rate, one can form an idea of the future of the currency. After all, all forecasts, exchange rates, or air temperature, are built on analysis.
When did bitcoin appear?
The first virtual coin appeared on January 9, 2009. It was bitcoin version 0.1, which was supported only by Windows operating system – XP, NT and 2000. In the same month there were two more significant events: the author Satoshi Nakamoto released the first unit, extracted 50 coins and made the first transaction in the system.
Six months later, for the first time, crypts were exchanged for fiat money: for 5,050 bitcoins, Marti Malmi received $ 5.02 per purse in the PayPal system.
In December 2009, a new version of bitcoin 0.2 was released, which allowed generating blocks not just one, but several streams at once. This markedly increased the success of the miners. Although not for long. Getting koin became more difficult when bitcoin 0.3 was released in the summer of 2010 and the number of its users increased.
The history of the BTC coin began two years before its release. Satoshi Nakamoto began work on the concept of the koin back in 2007, in 2008 a document was published describing the protocol and the operating principle of a unique system for making payments.
Prerequisites for creation
By digging deeper, you can see that the idea of creating virtual money is not new. Back in 1983, scientists David Chaum and Stefan Brands proposed e-currency protocols. Another significant contribution to the appearance of the crypt was made by Adam Bakov. In 1997, to counteract the sending of spam and fight against DoS attacks, he suggested using the Hashcash system, which became the main one for creating blocks in the chain of blockades.
Wei Dai and Nick Szabo are two researchers who had another brilliant idea in 1998. Interestingly, they did not work in a team. They proposed the concepts of crypto currency “b-money” and “bit-gold” respectively.
But the biggest contribution to the distribution of bitcoin was made by the American programmer Hal Finney . Even it’s hard to imagine that it was with the brainchild of Nakamoto, if not for this person. Hal at that time was the developer of the encryption system for e-mail with public key, the participants in the movement shifropankov – people who are interested in the preservation of anonymity and cryptography methods. Once he even made an attempt to create his own currency. Not surprisingly, Satoshi’s letter with news of Bitcoin interested him.
Running the program, Hal managed to get the address and private key to his wallet. But then the system failed. As a true fan of cryptography, Hal Finney figured out what the matter was and offered Nakamoto his help. So, Hal became the second user of the system, who managed to generate the second node and get 50 coins on his deposit.
From the very first day Finney believed in currency and even imagined that someday one BTC could cost 10 million dollars:
– Imagine: bitcoin can become the main payment system in the world! Then the cost of the issued coins is equal to all the world’s wealth.Hal Finney
How much did bitcoin cost when he appeared?
The very first bitcoin cost absolutely ridiculous money – about $ 0.001. And at the very beginning of those who took the coin seriously, it was not very much. Back in 2010, it was very easy to extract koin, so the number of them was off scale. They could not even think of where to spend their virtual savings.
Now many people remember the story of a true gourmet, Laszlo, who ate a pizza for 10 thousand bitcoins, as a joke. In the same year 2010, he offered 10 000 coins to the one who ordered pizza for him. Given the course, a high-calorie dinner cost him $ 40.
If László had abandoned the idea of eating and saving his coins, today he could have seen at least 80 million dollars on his account. And if you recall the maximum that in 2017 offered for bitcoin, then all 200 million! Here’s an expensive, but quite ordinary pizza with sausages, mushrooms and onions, even given the name Bitcoin-Pizza.
Who is Satoshi Nakamoto?
The author of bitcoin. Obviously! But not everything is so simple. Until now, it is not known who is behind the pseudonym of the creator of the world’s first crypto currency. Although no one knows the alias is this or his real name. Assumptions of a lot. Scientists even conduct whole studies to uncover this secret. Find the answer to the question, in their opinion, is very important, as this will give many explanations on the origin of the virtual currency and even help to build a forecast of the course for the future.
Some believe that this is a real man – a forty-year-old man who lives in Japan, educated, polite and fluent in English.
Others claim that this is a woman. And still others generally believe that a pseudonym hides a whole group of developers.
The essence of bitcoin: how the coin works
Simplicity is the main word that bitcoins can describe. Do not believe me? You read a lot of news and reviews and you still think that the crypto currency is too complicated and incomprehensible? Let’s understand.
Bitcoin allows people to transfer money as easily as sending emails or SMS. In all, you need to install a special purse application on a computer or smartphone, enter the amount, type or scan the purse address where the currency is transferred, and click send. Just a few minutes – and the money will be at the addressee.
How does it work?
At the most basic level, bitkoyn is just a magazine in which all the account numbers and balance sheets are collected. The amounts of transfers between accounts do not imply either a currency or gold. Only people’s faith is that coins are worth something, and a system that ensures an honest exchange.
With each transfer, the bitcoin-purse sends a message to the network with a description of how to change the log, the sender and co-payer account numbers, and the amount of the transaction.
Send such a message, as well as carry out a financial transaction, can only the owner of the wallet using a special signature. This is something like a hand-written painting, but which, no matter how hard you try, can not be faked. First, the basis of the public key is cryptography – the science of methods for ensuring data confidentiality. And secondly, all signatures are one-time.
Who verifies the authenticity of the key?
Strangely enough, any user can do this. Bitcoin developers created an independent, fully decentralized system for conducting anonymous open source transactions. The currency has no “shadow” owners who could manipulate the exchange rate. It can not be managed by large corporations, banks, most famous personalities, or public bodies. This allocation of responsibility and control to all network participants, who are equals, is called decentralization.
Simplicity, decentralization … What other features does the BTC have?
The Bitcoin system is built on a block system. Yes, yes, another clever word! “Blockchain is a distributed registry file, where data is stored …” – for sure you have heard this explanation of the term so popular this time. So blockade is a common database, which is a chain of blocks. At what the generated blocks from this chain can not be deleted or changed.
Blokchein provides several features of bitcoin, in addition to ease of use – transparency, anonymity and reliability, the speed of translations, the absence of intermediaries in transactions, irrevocability.
Anonymously. Or all the same not so?
Unlike bank transfers and transactions in most other payment systems, bit-addresses at the protocol level are not tied to the identity of the user. At any time, anyone can create a new address and a new public key bound to it without having to provide personal information. Transactions are also carried out without indicating the name and surname.
Another indication of anonymity is the use of randomly selected P2P network nodes when transferring coins.
But not everything is so secretive. All financial transactions that are conducted in the system are open and available for viewing to all its users. There, of course, do not specify your name and surname, just the address of the wallet. If you have publicly indicated this address somewhere, then any participant will be able to find out when and how many coins you listed. To ensure maximum anonymity, simply use a new bitcoin address for each transaction.
Fast. Very fast
How long will it take for money to reach another continent, for example, by bank transfer. Three days, no less. This is even without taking into account the queues in the bank and the time for filling in all the necessary papers. Translation through an electronic payment system will take a little less time – a maximum of one day. Using the network bitcoin, your relative, friend or just a friend can get you a debt or a gift in 30 minutes. Anywhere in the world! Usually it takes a few minutes to translate bitcoins. But it all depends on the workload of the network. In the history of the coin’s existence, it took more than half an hour to effect a transaction.
All payment systems, without exception, charge a fee for the service. In the bank for the transfer to another country generally have to shell out at least $ 50.
Bitcoin takes commission only in case of transfer less than 0,01 BTC. And the user can set the amount of compensation independently: the larger the amount of commissions, the faster the transaction will pass.
The network itself is mostly yes. The reliability and security of bitcoin wallets should be considered separately.
Why basically? In the whole history there was only one hacking of the system. On August 15, 2010, scammers exploited the imperfection of a young network – before the addition of transactions to the blockade they did not analyze them – they generated 184 billion bitcoins and sent them to two addresses. In a couple of hours, this transaction was removed from the blockade (thereby violating one of the main principles of the blockbuster – the immutability – and splitting the adherents into two camps) and corrected the problem.
Currency bitcoin: course dynamics
In the history of the world’s first crypto-currencies, there were both ups and downs. And this is natural! For nine years of existence, which just might not happen. There were times when value did not move from the dead center. And there were sharp ups to unprecedented heights.
The first official course in relation to traditional coins bitcoin gets on October 5, 2009. Then for one dollar you could buy 1309 coins. The first take-off occurred in June 2011, when the cost just a week rose from 10 to 32 dollars. Afterwards, there was a drop to the same $ 10.
The cost of the coin remained virtually unchanged until February 22, 2013, when the price rose again to $ 30. It was on this day that the currency began to grow smoothly, by April 10, one BTC was worth $ 266. The potential of virtual money was realized by November 2013, when the coin rose in price to 1242 dollars. After that, the rate fell slightly and overcame the $ 1,000 mark only in December 2016.
The year 2017 turned out to be really hot for bitcoins. March 2 this year set a new price record – $ 1,290 for one coin. In the same month, BTC became more expensive than one ounce of gold. Similar records throughout the year happened a lot.
The most successful period for the coin was the middle of December, when one BTC could be bought and sold for a record to this day 20 thousand dollars.
What is secured by bitcoin and what affects its cost?
The cost of fiat money is something reinforced. Either the country’s reserves – oil, gold, or GDP, or other assets. Expensive assets, the weight of Fiat increases and vice versa.
There are no resources for bitcoins. To calculate its real value, other methods are used. One such is the evaluation of rare materials. It is this technique used in assessing the cost of diamonds, rhodium, tritium or, for example, peynite. One gram of this rare crystal costs 9 thousand dollars. Everything would be fine, but it does not even have any practical value. Values are added to it by a limited number.
So with the bitcoins. Their release is limited to a mark of 21 million coins. The currency will cease trading around the year 2140. Every year, getting coins is becoming more difficult: the time and the required capacity of equipment are increasing. Plus, all the time in four years, the reward for the found block is reduced by half. All this, of course, affects the value of the coin.
Demand is another factor affecting the price. It is demand that increases the cost – this is the law of the market. Often, after a sharp jump in the rate, one can see an increased interest in buying bitcoins by users.
Bitcoin positions itself as a decentralized payment system. But lately, the decisions taken on it at the state level began to influence the price of the coin more and more often. For example, at the beginning of 2017, the course significantly subsided after the news from the Chinese crypto-currency market, where the authorities imposed restrictive measures on the work of exchanges.
Find the answer to the question “What is secured by bitcoin?” In the usual coordinates – still a mistake. The main factor in price growth is progress.
What is happening with bitcoin now: the forecast of the course
In 2018 the coin began with a fall. And a record: from 17 thousand in January to 6 in February. This decline is attributed by experts to the same China. This time the authorities completely banned the mining of bitcoins in the country and blocked all stock exchanges and sites with ICO.
What will happen to the currency next is unknown. Maybe, like last year, the coin will recover and begin to increase in price. Or it may happen that investors will like another currency (there are now more than 300 varieties!), Then BTC will continue to fall.
But most experts still tend to the first option. Co-founder of Fundstrat Global Advisors Tom Lee suggests that by the end of 2018 the cost will grow to 25 thousand dollars. More loyal to the coin is the executive director of the Bitcoin Foundation, Lev Klaasen, whose forecast is 40 thousand dollars per coin by the end of 2018.
Cryptoinvestor Petros Anagnostu is building long-term prospects and expects that by 2020 one bitcoin will cost from 50 to 100 thousand dollars.
Crypto currency bitcoin: methods of obtaining
Like any other crypto currency, in bitcoin, the main, or rather the original mining method is mining – the process of creating blocks using the computer’s hardware capacity. If in 2009-2011 for the extraction of coins it was possible to do with a conventional computer, today this requires whole farms – special installations that combine tens or even hundreds of video cards. In general, today mining is not the most profitable way to get bitcoins. Plus, in some countries, this process is generally considered illegal.
Do not worry, there are many other ways to become the owner of popular crypto currency and even make a profit.
This is an analog of classic mining, but only with its own peculiarity – the lack of the need to buy expensive video cards and customize the software. The user only needs to buy the power of special equipment, which is installed in data centers. The extraction process is conducted in the cloud. The main risk is scammers. So be careful before buying!
These are services where you can buy bitcoins for the usual currency. The main thing is to choose a good exchanger with an acceptable course and impeccable security. In Runet, the authority is used by such services as Changelly, 60cek, LocalBitcoins. Bitcoin exchangers are a good way if you are attracted by investing in the most popular crypto currency.
If you want not only to invest in a coin, but also to earn on it, use crypto-exchange exchanges. To buy, sell or exchange bitcoins not only for dollars, euros, rubles or other fiat money, but also for other crypto-currency coins, you need to choose a platform, start your account and start trading there. Registration is usually simple and does not take much time.
Experienced traders know: capitalization is possible on the difference of rates. Each trading floor offers its own terms: futures contracts for bitcoins, input and output methods, commission for transactions, tools for analytics and trading.
This is the way to get bitcoin without material investment. The only thing you need is access to the Internet, time and patience. A lot of patience.
Cranes are online services that give out visitors to the crypto currency for free. You just need to fill in the captcha or do another non-labor-intensive action – and the coins will drip into your accounts. True, the amount there is minimal. To get profitability in the form of at least one bitcoin, you need to try.
Storage of bitcoins: a brief overview of wallets
Variants of storage of a cash mass. They can be put in an ordinary purse with a lock or a piggy bank. In the Soviet Union, they generally kept money in ordinary banks. Or under the mattress. Who is on that much. Today cash can be immediately put on the card.
How to be with bitcoin, which even you can not touch? We tell about where the crypto currency is stored and how to choose the safest purse.
Where are the bitcoins stored?
Today there are five ways to store the first crypto currency:
- On a personal computer;
- Removable media;
- On the exchange or web service;
- On paper;
- On the map.
This is a special program that installs on your computer and provides encryption and protection of your wallet with a strong password. There are two types of such wallets: “thick” and “thin.” The first download the entire block, for this you need a lot of free space on your PC. The most popular representative of this type is the official client of the Bitcoin Core network.
“Thin”, or “light” wallets do not imply downloading the entire block, they can connect to it through third-party services, which greatly simplifies the life of the bitlocker. The best among such purses is Electrum, which requires minimal effort from the owner of bitcoins. You just need to install the software and select the server, after which the user receives a password-phrase, which must be kept. If anything, it will help to restore access to the repository.
Often, all PC storage programs have a mobile version, so that it is convenient to manage bitcoins from the phone. But there are special wallets that are designed specifically to buy and sell bitcoyne on the phone or even pay for goods or services. Most popular applications:
- Mycelium Wallet ;
- Bitcoin Wallet ;
- Xapo ;
- Online wallets .
These are third-party resources on the Internet, which relieve the bitcoin owner of the need to install additional software on his computer. One of the advantages of this storage is access to the wallet from any device and from anywhere.
In addition to special online resources for storing coins, you can use crypto-exchange exchanges. However, experts advise to store on trading floors only small amounts.
This option is suitable for those who want to visualize their money in any way. Bitcoin-address and private key are generated in the form of two QR-codes, which can be printed and must be stored in a safe place.
In addition to the availability of this type of wallet, many also talk about its unconditional reliability. Although this can be argued. Yes, he is not threatened by the possibility of cyber attack or hardware failure. But confirmations and guarantees that the address is kept exclusively by the owner, no. In addition, the very scan of QR-code creates certain vulnerabilities.
It’s something like a small USB flash drive. The hardware purse is a special device that serves as an offline storage of crypto currency. This method of storage has both its advantages and disadvantages.
The advantages are obvious:
- Support for all available cryptotices;
- Software for all operating systems, including mobile;
- Support of various crypto-currencies;
- Easy to use and connect;
- High level of protection.
The only drawback is the price. Yes, you need to pay for such a purse. The amounts are different, an average of 60 to 200 dollars. The most popular on the market are Trezor, Ledger Nano S, Keep Key.
A new word in the storage of crypto currency. They resemble ordinary plastic cards. The same compact and also easy to use. Only much more reliable. The card contains a QR code on one side and a bitcoin address on the other.
Hot and cold storage: what are the differences?
Many owners of bitcoins still argue which storage is more reliable and convenient – hot or cold. Let’s see what this is all about and how these options differ.
The easiest way to distinguish these storage options is to determine the need for the Internet connection to work. Hot wallets always require a connection to the network. Otherwise, you simply can not make the necessary transaction. Cold wallets work completely autonomously. Of the storage options listed above, the hardware and paper wallets belong to the cold storage. They are distinguished by increased reliability, since intruders simply do not have the physical ability to steal your savings from there.