A lot has been said about Bitcoins and its purported innovations. In spite of that, however, many people are still unaware of how they actually work. This article seeks to help with that by providing a basic explanation on the matter.
Bitcoin Beginners Guide
Most people still do not understand what Bitcoins are. In a nutshell, they are a type of virtual coins which can be used digitally as a medium of transaction online. To be more specific, these are computer algorithms which serve as monetary units. You can use them for purposes for trade or as a form of investment.
The parties involved can facilitate the trade directly thus eliminating the need for a middleman. However, readers should understand that all Bitcoin exchanges are final and irreversible unless the receiving party voluntarily chose to give back the funds.
It is also worth noting that Bitcoins have no controlling force behind it. Unlike modern money as we know it, Bitcoins are not monitored by central authorities such as banks and federal government agencies. Rather, they are extremely decentralized, with its users helping run the entire system.
However, contrary to popular belief, Bitcoins do not offer the level of anonymity that it has become infamous for. Transactions can still be traced as there is still a log of all the transactions taking place. The only difference is that you do not need to present other sensitive data such as addresses, bank accounts, and social security numbers in order to buy something online.
Bitcoin Mining for Dummies
Transactions are processed through Bitcoin mining. This is done in order to protect the integrity of the public log. It prevents people from cheating while also ensuring that the block chain remains neutral.
To explain it further, mining is best seen as a consensus-building system for Bitcoin users. All the trades are confirmed through it as they become part of the block chain. This is vital in order to ensure that all the computers on the system agree on its current state.
This article presented readers with a few basic Bitcoin concepts. Make sure that you understand these things well so that you know what you are doing.