Unless you have been living in a cave hidden under a rock trapped under the Titanic’s wreckage, you surely must have heard of Bitcoin by now.
Created in 2008 by the pseudonymous Satoshi Nakamoto, this crypto-currency has steadily gained mainstream acceptance both online and offline.
You can buy a beer with Bitcoin, pay for online dating services, and even retrieve it from some ATMs.
So how can you get your hands on some Bitcoins?
Well, the first option is to head over to one of the many platforms that have sprung up online and exchange some of your dollars, euros or any other fiat currency for Bitcoins.
The second option is to roll up your sleeves and ‘mine’ your own Bitcoins. Keep in mind though that it will be at least six months before you recover the money you will have to sink into the spades and pickaxes needed in this gold rush.
You know what they say you gotta spend some to make some…
In layman’s terms, how are Bitcoins ‘mined’?
The process of mining Bitcoin involves using computer power to process Bitcoin transactions and ensure that the Bitcoin system remains not only secure but also well synchronized despite being decentralized.
With specifically specialized Bitcoin software and hardware, you perform certain tasks to facilitate Bitcoin transactions going on in the network and in return for this, you receive a fee which is presently a block 25 Bitcoins.
Basically, you get paid for keeping the Bitcoin machine well oiled and running smoothly.
So I have to be a tech geek to ‘mine’ Bitcoins, right?
Not really, but because the algorithms are getting harder, you need more processing power now, more than ever, to ‘mine’ Bitcoins. You see, as more Bitcoins enter the system, the algorithm becomes harder. There are just over 12 million Bitcoins in circulation.
Take note though that the amount of Bitcoins entering the system will never exceed 21 million, as was written in the protocol of the original code; and this is to be reached in 2140.
Therefore, the sequence of ‘mining’ will never speed up and the time taken to crack the coin will never change either. It takes eight to ten minutes for a block chain to be mined.
If you are really serious about ‘mining’ Bitcoin, it is best that you first do your homework and find a genuine pool of other ‘miners’ to combine your resources with because as it stands these days, the chances of securing a block chain as an individual ‘miner’ are quite slim.
Can Bitcoin be a viable alternative to conventional money?
All fun and games aside, yes it could. You see, more and more people are disappointed with the current financial system, and strongly desire to take the control of money away from the government. This is where Bitcoin, free of any central bank’s control, comes in handy.
The convenience and affordability of transacting in Bitcoin is also a huge plus. You can send Bitcoin, even in small amounts free of charge to anyone in the world, instantly. The conventional bank wire transfer will take a couple of days and cost no less than 20 bucks.
Plus, after growing in value by over tenfold in a matter of months, many investors are considering adding Bitcoin to their portfolios but this is still a very risky investment to venture into as its value continues to fluctuate heavily.
When Zynga revealed it would accept Bitcoin for some of its games, it crossed the $1,000 threshold, only to plunge to around $800 a few days later when Alibaba, China’s largest e-commerce group, announced a ban on Bitcoin transactions starting January 14.
How have conventional bankers received Bitcoin?
There are at least 60,000 Bitcoin transactions a day and yet Bitcoin, worth around $8.5 billion now, is only one of the 59 different crypto-currencies at the moment. Unsurprisingly, this growing acceptance of digital money has left bankers rather hot under the collar.
Most of the major central banks have issued warnings to public about using Bitcoin; China and India have cracked down heavily on its use while Thailand has explicitly banned it. However, I must say some of the arguments against it are honestly laugh-worthy.
Take the one based on the Bitcoin thefts that have occurred so far, for example.
Yes, people steal Bitcoins but hey, if we have pickpockets in the physical world, what makes you think they wouldn’t follow us to cyberspace? A little good old vigilance will go a long way in keeping one’s precious Bitcoins safe.
Then there are those trying to paint Bitcoin as the criminals’ currency.
Yes, it’s true that Bitcoin was used on the shady online market SilkRoad to trade drugs, guns and other contraband but hey, it is no secret that the good old greenback and other fiat currencies are still more beloved by drug cartels!
What’s next for Bitcoin and all the other crypto-currencies? We can only wait and see…