Bitcoin
Bitcoin
What is Bitcoin?
Bitcoin is the first crypto currency that saw large implication and is so far the most successful of its kind. It was created in 2009 by Satoshi Nakamoto, but the identity of the person is unknown.
How does bitcoin blockchain work?
Bitcoin transactions work based on blockchain. People have to include payments on a block (payments have digital signatures) and add a number at the end of the block that makes the SHA-256 function output of the block start with a certain amount of zeroes to prove that they have done work, that number is also added to the start of next block to create a block chain (every digit change changes the SHA-256 function output). And if at any point the blockchain spreads into two, the longer block chain is considered more trustworthy. Blocks are on average 10 minutes apart and have roughly 3000 transactions on them. People who create these blockchains are called miners and are rewarded bitcoins for their work.
The drawbacks of the system is that if one group of miners have over 50% of mining power, then they can control the blockchain. Also it uses a lot of energy and that is bad for the planet.
What are the advantages and usage of bitcoin?
Bitcoin is relatively anonymous.
The supply of bitcoins is limited and predictable, unlike USD that can be printed.
Banks can’t use your money.
In recent years bitcoin has grown a lot in value and is seen as investment.
No taxes.
No transaction costs.
Government can not freeze your bitcoin.
What are the disadvantages of bitcoin?
One really big weakness of bitcoin is that it has a very unstable price, and in my opinion is too unstable to be a good currency. There is even a joke about it:
son: “Dad, can you get me a bitcoin for Christmas?”
Father: “16,548$?! Why on earth would you need 15,749$ for?
Some countries also might ban bitcoin.
Used articles:
https://www.investopedia.com/news/how-bitcoin-works/
https://jokojokes.com/bitcoin-jokes.html
https://komodoplatform.com/en/academy/sha-256-algorithm/
https://www.investopedia.com/terms/b/bitcoin.asp
https://www.youtube.com/watch?v=bBC-nXj3Ng4
https://cs.stanford.edu/people/eroberts/cs201/projects/2010-11/DigitalCurrencies/advantages/index.html
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