By: Kenneth Baker & Jason Luczak
If you haven’t heard of Bitcoin by now, you haven’t been paying attention. Bitcoin and other cryptocurrencies such as Litecoin, Ethereum, and Ripple have dominated headlines for the past six months. Cryptocurrencies are digital assets designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. What does that mean? Basically, it is a computer generated asset that is capable of being bought and sold. There is a finite number of Bitcoins, which creates demand, and therefore creates value for the crypto-asset. The Blockchain is what secures the cryptocurrency. Blockchain technology is a public ledger that tracks Bitcoin transactions. Every second, millions of people are buying and selling Bitcoin. Every transaction has a specific transaction code and is part of the Bitcoin Blockchain. This procedure creates a record of authenticity that is verifiable by a user community, increasing transparency and reducing fraud. This is where miners come in.
Bitcoin miners utilize highly-advanced supercomputers, much greater than your common PC, to “mine” for Bitcoins. However, this characterization is a tad deceiving. Miners do not find Bitcoins on the internet, rather, the miners are tracing the Blockchain transactions, and once the transactions reach a certain threshold, and the miners complete a “block,” they are rewarded in, you guessed it, Bitcoins. Bitcoins are thus a form of currency that is capable of being used to purchase goods and services on the internet. While this is a simplistic explanation for how Bitcoin operates, it is helpful to understand that this entire process is completely free from governmental intervention. Therefore, there is currently no recourse for any person that is cheated out of a transaction using Bitcoin.
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