Cryptocurrencies have been on the rise in popularity and value over the years, with a history spanning more than 30 years there has been a rise in digital currencies sprouting all over. The first decentralized digital currency, bitcoin came into being in 2009 by a developer who goes by the pseudonym, Satoshi Nakamoto. The idea that Nakamoto postulated was that he wanted to bring into being a new era in electronic trading. In 2011 Nakamoto gave away the cryptocurrency’s source code and domain to the online bitcoin community and was never heard from again. Although Nakamoto’s identity has not yet been formally verified, bitcoin has brought about a change in the way people trade online.
So what are bitcoins? Well to simplify, bitcoins are a digital currency used to trade online. Due to its decentralized nature, many have turned to trading and shopping with it online. Since there are no authorities that control people have taken a liking to using bitcoins because of how their identities are protected, and only encryption keys are used in transactions. There has been a rise in bitcoin mining over the years with people building bitcoin mining farms or acquiring or building powerful computer systems that mine bitcoins over the internet.
Bitcoin mining is a process where the processes of a system advanced calculations and data storage. This happens when bitcoins are sent during transactions, and all these transactions are then recorded into a digital ledger. Computer rigs that possess a lot of processing power are then used to track and record this transaction using special software for mining. It is this accumulation of transactions and records that is termed BlockChain which essentially forms the backbone of bitcoins.
During the mining process (Which eats up a lot of power) sequences of code known as hashes are produced. A lot of power to compute these hashes is thus required and mostly the more processing power you have, the more you make from the mining process. As every hash is computed, it is then added to blocks in the BlockChain. The current payout for bitcoin miners is 12.5 bitcoins and if converted to most fiat currencies is a substantial amount of money.
The value of bitcoins is thus regulated by the amount that people are willing to pay however as it stands the source code left by Nakamoto limits the total number of bitcoins to 21 million. In essence, bitcoins are limited and are very volatile, their value can change at any time and making sudden huge investments may be costly however those that have risked an investment have become millionaires.
A lot of companies have started that deal with currency exchanges to bitcoins for those that want to buy bitcoins. Buying bitcoins means you assume a certain risk which is brought about by the speculative rise and fall of its value. Trading requires a level of finesse that would ensure that you gain more than losing and mining also requires a large investment to get a system powerful enough to mine bitcoins efficiently. It is indeed taking the world by storm, and plenty waits to be seen what the future holds for bitcoins.