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What is Bitcoin?
Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly without an intermediary such as a bank. Bitcoin...
Yazar: johnlord
Yayınlanma: 25 Ağustos 2021 19:59
Güncellenme: 19 Kasım 2024 03:17
What is Bitcoin?
Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly without an intermediary such as a bank. Bitcoin’s creator Satoshi Nakamoto initially described it as the need for "an electronic payment system based on cryptographic evidence rather than trust." "The reason for the value for money is that as people we decide it has the same value for gold as gold," says Anton Mozgovoy, co-founder and CEO of holyheld, a digital financial services company. Bitcoin has risen to its highest value since its IPO in 2009. Although it once sold for less than $150 per coin, as of March 1, 2021, a Bitcoin is now selling for almost $50,000. Since its supply is limited to 21 million coins, many expect its price to continue to rise as time passes, especially as larger, institutional investors begin to handle it as some form of digital gold to protect against market volatility and inflation.Why bitcoin?
Bitcoin can be used to book hotels on Expedia, shop for furniture on Overstock and purchase Xbox games. So in general, Bitcoins can be used to buy goods anonymously. In addition, international payments are easy and inexpensive, since bitcoins are not linked to any country. Since there is no credit card fee, it is also popular with small businesses. Some people buy bitcoins as investments and hope its value will rise.How does Bitcoin work?
Each Bitcoin is basically a computer file stored in a 'digital wallet' app on a smartphone or computer. People can send Bitcoin (or part of a Bitcoin) to your digital wallet and you can send Bitcoin to others. Each transaction is saved on a public list called blockchain. This makes it possible to track the history of Bitcoins to prevent people from spending coins they don't own, creating copies, or undoing transactions.Blockchain:
Blockchain is a shared, immutable ledger that streamlines the process of recording transactions and tracking assets on a business network. It can be a tangible asset (house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Almost anything valuable can be tracked and traded on a blockchain network, which reduces risk and reduces costs for everyone involved.Blockchain is important because:
Blockchain is an instant shared and fully transparent network stored in an immutable ledger that can only be accessed by authorized network members. A blockchain network can track orders, payments, accounts, production, and much more. And since members share a single view of the truth, they can follow all the details of a transactions.How Blockchain Works:
Each time a transaction occurs, transactions are saved as data "blocks". These transactions indicate the movement of an asset that may be material (a product) or intangible. The data block can record the information you choose: who, what, when, where, how much... Each block is connected to the blocks before and after it. These blocks create a data chain when an entity is moving from place to place or when ownership is changing hands. Blocks confirm the exact time and order of operations and blocks are securely linked together to prevent any block from being replaced or a block from being added between two existing blocks. Transactions are blocked together with an irreversible chain and form a blockchain. Each additional block strengthens the verification of the previous block and therefore the entire blockchain. This eliminates the possibility of tampering with by a malicious actor and creates a ledger of transactions that you and other network members can trust. Blockchain is not centralized, which means that it is not controlled by any organization. "It's like a Google Doc that anyone can work on," says Buchi Okoro, CEO and co-founder of Quidax, the African cryptocurrency exchange company. "No one owns it, but anyone with a connection can contribute to it. And as different people update, so does your copy." While the idea that anyone can edit blockchain may seem risky, this is actually what makes Bitcoin reliable and secure. In order to add a trading block to the Bitcoin blockchain, it must be verified by the majority of all Bitcoin owners, and the unique codes used to recognize users' wallets and transactions must comply with the correct encryption pattern. These codes are long, random numbers, which makes it incredibly difficult to generate them fraudulently. In fact, according to Bryan Lotti of Crypto Aquarium, a fraud who guesses the key code of your Bitcoin wallet has roughly the same odds as someone who has won the Powerball lottery nine times in a row. This level of statistical randomness blockchain verification codes required for each transaction greatly reduces the risk of fraudulent Bitcoin transactions.How Bitcoin Mining Works
Bitcoin mining is the process of adding new transactions to the Bitcoin blockchain. People who choose to mine Bitcoin use a process called proof of work by distributing computers in a race to solve mathematical puzzles that verify transactions. To convince miners to continue competing to solve puzzles and support the general system, the Bitcoin code rewards miners with new Bitcoins. "This is how new coins are created," Okoro says. In the early days, it was possible for the average person to mine Bitcoin, but this is no longer the case. The Bitcoin code is written to make solving their puzzles even more difficult over time and to require more and more sources of computing. Today, bitcoin mining requires powerful computers and access to large amounts of cheap electricity. Bitcoin mining also pays less than before, making it even more difficult to compensate for rising computing and electricity costs. "In 2009, when this technology first came out, every time you obtained a stamp, you would get a much larger amount of Bitcoin than you do today," says Flori Marquez, co-founder of blockfi, a crypto wealth management company. "Now there are more transactions, so the amount you pay for each stamp is less." By 2140, it is estimated that all Bitcoins will be in circulation, meaning mining will not release new coins, and miners may have to rely on transaction fees instead.How to Use Bitcoin?
In the U.S., people often use Bitcoin as an alternative investment and help diversify their portfolios outside of stocks and bonds. You can also use Bitcoin to make purchases, but the number of merchants accepting cryptocurrency is still limited. Large companies that accept Bitcoin include Overstock, AT&T and Twitch. You can also find some small local retailers or certain websites receive Bitcoin. PayPal announced this year that it will activate cryptocurrency as a source of financing for acquisitions. Spencer Montgomery, founder of Uinta Crypto Consulting, said that "they have 346 million users and are connected to 26 million sellers," adding that bitcoin is "huge and still growing". You can also use a service that allows you to connect a debit card to your crypto account, which means you can use Bitcoin the same way you use a credit card. This also usually involves a financial provider instantly converting your Bitcoin into dollars. In countries other than America (especially those with less stable currencies), people sometimes use cryptocurrency instead of their own. "Bitcoin provides an opportunity for people to store value without relying on a government-backed currency," Montgomery said. "It gives people the option of hedging for the worst-case scenario. You already see people in countries like Venezuela, Argentina, Zimbabwe - in heavily indebted countries, Bitcoin is gaining tremendous attraction." However, when you use Bitcoin as a currency, you should be aware of some tax implications. In the U.S., cryptocurrency taxes are based on an IRS ruling in 2014 that the cryptocurrency should be treated as a capital asset (such as stock or bond) rather than a currency (such as dollars or euros). This decision has major consequences as it opens up more complex taxes for people with cryptocurrency. Capital assets are taxed when sold on profit. When you buy goods or services in cryptocurrency and the amount of cryptocurrency you spend gains more value than you pay, your spending is subject to capital gains taxes. Let's say you buy Bitcoin worth $20 and keep it while its value rises to $200. If you used Bitcoin to make groceries worth $200, you would be owed capital gains taxes on a profit of $180, even if you looked like you sold Bitcoin. Jeff Hoopes, an associate professor at the University of North Carolina and research director of the UNC Tax Center, said the IRS's decision to tax cryptocurrency as a capital asset may have been due to the way most people behave in this regard. "I assume that's what the IRS decides, because most people keep crypto as an investment, and we tax appreciation for capital assets held as investments," he said. But Jon Feldhammer, tax partner at Baker Botts, said the IRS's decision could be a pragmatic move. "Bitcoin started to have transaction volumes of tens of millions of dollars every day, and it was clear that the IRS was missing out on a significant source of tax revenue," he said.How to Buy Bitcoin?
Most people buy Bitcoin through exchanges like Coinbase. Exchanges allow you to buy, sell and hold cryptocurrencies, and opening an account is like opening an intermediary account - you need to verify your identity and provide some kind of source of financing, such as a bank account or debit card. The main platforms are Coinbase, Kraken and Gemini. You can also buy Bitcoin from a broker like Robinhood. No matter where you buy your Bitcoin, you'll need a digital wallet to store it. It's called a hot wallet or a cold wallet. The hot wallet (also called an online wallet) is stored by an exchange or provider in the cloud. Online wallet providers include Exodus, Electrum and Mycelium. A cold wallet (or mobile wallet) is an offline device used to store Bitcoin and is not connected to the Internet. Some mobile wallet options include Trezor and Ledger.İLGİLİ HABERLER
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