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 Bitcoins Explained (Sort Of)
Charles
 Posted: Dec 9 2017, 09:42 AM
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Bitcoin

From Wikipedia, the free encyclopedia

user posted image

Bitcoin is a digital and global money system (currency). It allows people to send or receive money across the internet, even to someone they don't know or don't trust. Money can be exchanged without being linked to a real identity. The mathematical field of cryptography is the basis for Bitcoin's security.

A Bitcoin address, or simply address, is an identifier of 26-35 alphanumeric characters, beginning with the number 1 or 3, that represents a possible destination for a bitcoin payment. Addresses can be generated at no cost by any user of Bitcoin. For example, using Bitcoin Core, one can click "New Address" and be assigned an address. It is also possible to get a Bitcoin address using an account at an exchange or online wallet service.

There are currently two address formats in common use:

Common P2PKH which begin with the number 1, eg: 1BvBMSEstWetqTFn5Au4m4GFg7xJaNVN2.

Newer P2SH type starting with the number 3, eg: 3MXknxVapwv6QkMoQv99MBuXZ2XpPewHn9


Anonymity

One of the differences between using bitcoin and using regular money online is that bitcoin can be used without having to link any sort of real-world identity to it. Unless someone chooses to link their name to a bitcoin address, it is hard to tell who owns the address. Bitcoin does not keep track of users; it keeps track of addresses where the money is.

Each address has two important pieces of cryptographic information, or keys: a public one and a private one. The public key, which is what the "bitcoin address" is created from, is similar to an email address; anyone can look it up and send bitcoins to it. The private address, or private key, is similar to an email password; only with it can the owner send bitcoins from it. Because of this, it is very important that this private key is kept secret. To send bitcoins from an address, you prove to the network that you own the private key that corresponds to the address, without revealing the private key. This is done with a branch of mathematics known as public key cryptography.

Public Key

A public key is what determines the ownership of bitcoins, and is very similar to an ID number. If someone wanted to send you bitcoins, all you would need to do is supply them your bitcoin address, which is a version of your public key that is easier to read and type. For example, if Bob has 1 bitcoin at the bitcoin address "ABC123," and Alice has no bitcoins at the bitcoin address "DEF456," Bob can send 0.5 bitcoins to "DEF456." As soon as the transaction is processed, Alice and Bob both have 0.5 bitcoins. Anyone using the system can see how much money "ABC123" has and how much money "DEF456" has, but they cannot tell anything about who owns the address.

Private Key

In the example above, "ABC123" and "DEF456" are the bitcoin addresses of Bob and Alice. But Bob and Alice each have a second key which only they individually know. This is the private key, and it is the "other half" of a Bitcoin address. The private key is never shared, and allows the owner of the bitcoins to control them. However, if the private key is not kept secret, then anyone who sees it can also control and take the bitcoins there. This happened on live TV when Bloomberg's Matt Miller accidentally showed a private key to viewers.[2] The money was taken immediately. The person who took it, told others about it later, saying "I'll send it back once Matt gives me a new address, since someone else can sweep [empty] out the old one."

Technical Details

The Blockchain

Sites or users using the Bitcoin system are required to use a global database called the blockchain. The blockchain is a record of all transactions that have taken place in the Bitcoin network. It also keeps track of new bitcoins as they are generated. With these two facts, the blockchain is able to keep track of who has how much money at all times.

Mining

To generate a bitcoin, computers run specialized software. Because of how complicated the math needed to generate a bitcoin is, they must be calculated with very powerful processors. These processors can be found in CPUs, graphics cards, or specialized machines called ASICs. The process of generating the bitcoins is called mining. People who use these machines to mine bitcoins are called miners. Miners either compete with one another or work together in groups to solve a mathematical puzzle. The first miner or group of miners to solve the particular puzzle are rewarded with new bitcoins.

The puzzle is determined by the transactions being sent at the time and the previous puzzle solution. This means the solution to one puzzle is always different from the puzzles before. Attempting to change an earlier transaction, maybe to fake bitcoins being sent or change the number of someone's bitcoins, requires solving that puzzle again, which takes a lot of work, and also requires solving each of the following puzzles, which takes even more work. This means a bitcoin cheater needs to outpace all the other bitcoin miners to change the bitcoin history. This makes the bitcoin blockchain very safe to use.

QR Codes

A popular image associated with Bitcoin is a QR code. QR codes is a group of black and white boxes that are similar to barcodes. Barcodes have one dimension of information, while QR codes have two (horizontal and vertical). Barcodes are a row of lines, and QR codes are a grid of squares. Bitcoin uses QR codes because they can store a lot of information in a small space, and a camera such as a smartphone can read them. The two QR codes on the Bitcoin note are the public and private addresses, and can be scanned with a number of online tools.

Exchanges

Everyone in the Bitcoin network is considered a peer, and all addresses are created equal. All transactions can take place solely from peer to peer, but a number of sites exist to make these transactions simpler. These sites are called exchanges. Exchanges provide tools for dealing in Bitcoin. Some allow the purchase of Bitcoin from external accounts, and others allow trading with other cryptography-based currencies like Bitcoin. Most exchanges also provide a basic "wallet" service.

Wallets

Wallets provide a handy way to keep track of all of a user's public and private addresses. Because addresses are pseudo-anonymous, anyone can have as many addresses as they want. This is useful for dealing with multiple people, but it can get complicated to manage multiple accounts. A wallet holds all of this information in a convenient place, just like a real wallet would. A backup of a wallet prevents 'losing' the bitcoins.[3]

Popularity

Bitcoin adoption and use continues to grow a lot every year. Since 2012, Bitcoin has gained the attention of the mainstream media; one way is the WannaCry ransomware created in May 2017.[4] Adoption growth has not only happened for consumers, but also for many companies, who are looking to make use of all of the advantages of Bitcoin.


https://simple.wikipedia.org/wiki/Bitcoin

Bitcoins have been in the financial news a lot recently but, like many others, I didn't have much of a clue about this crypto-currency. The article I have posted gives quite a bit of information but doesn't mention such terms as "money laundering" and "tax evasion" which bitcoin can apparently provide.

As yet Bitcoins aren't traded on the stock market but this may occur soon. Currently they are available through brokers.

The Bitcoin value has soared recently and many have made real profits. However, as with many schemes, there is a danger that the bubble might burst and "late-comers" might get burnt.

To be honest, I'm still not sure how such huge profits can be made. I can understand anonymous cyber-transactions, but where does the actual money come from when you sell and deposit real money into a bank?

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Alicia
 Posted: Dec 9 2017, 11:49 AM
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It is all above my head. I would like to know who it is who actually creates the bitcoin. Someone must do it. To me , it sounds like thin air conjuring. All too hard for my tiny brain.
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Charles
 Posted: Dec 9 2017, 04:52 PM
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A quote in today's Weekend West best sums up the whole concept.

“Bitcoin mania is simply about betting how far the price can run before the speculative bubble bursts, probably when massive fraud is eventually perpetrated.”

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"If you don't read the newspaper you are uninformed,
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"A government which robs Peter to pay Paul can always depend on the support of Paul." - George Bernard Shaw
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Bill
 Posted: Dec 10 2017, 11:51 AM
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It will get really interesting when countries start trading commodities (like oil) using Bitcoin.

The $US will collapse and, if you think tax avoidance is a problem now, wait until you have no idea who is trading what and for how much.

A collapse of the Bitcoin bubble won't just affect those who've invested in it - everyone will bear the brunt.

On a sobering note, I agree with Alicia - "It is all above my head. I would like to know who it is who actually creates the bitcoin. Someone must do it. To me , it sounds like thin air conjuring. All too hard for my tiny brain."

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scepo
 Posted: Dec 10 2017, 02:20 PM
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On a sobering note, I agree with Alicia - "It is all above my head. I would like to know who it is who actually creates the bitcoin. Someone must do it. To me , it sounds like thin air conjuring. All too hard for my tiny brain."



You are not alone Alicia and Bill, I have no idea either. All I know is, I wouldn't touch it with a forty foot pole.

But no doubt some have/will get very wealthy from it, while others will lose. I just hope I am unscathed by staying away from it. http://fairdinkumnewschat.b1.jcink.com/uploads/fairdinkumnewschat/smiley_don_t_know.gif

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Flin
 Posted: Dec 10 2017, 03:37 PM
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Trying to comprehend this makes my brain freeze up http://fairdinkumnewschat.b1.jcink.com/uploads/fairdinkumnewschat/9750.png

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Bear
 Posted: Dec 10 2017, 05:12 PM
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There are hundreds of different cryptocurrencies, Bitcoin is on the top. Buying into cryptocurrencies is similar to the share market - one thing of interest is that when the sharemarket is down cryptocurrencies go up, and vice-versa.

Bitcoin is used a lot by criminals on the dark web.


Dark Markets: How to Buy Things from the Deep Web’s Black Markets.

The deep web (a.k.a. the darknet or dark web) has become famous for its black markets, where intrepid shoppers can use Bitcoin and other cryptocurrency to purchase everything from drugs to guns to stolen credit card details over the internet. If have ever wondered how to access these dark web markets and how to buy things from them then this article is for you.

http://cryptorials.io/dark-markets-how-to-buy-things-from-the-deep-webs-black-markets/

The NYSE Bitcoin Index is up another 189 percent so far in 2017, as bitcoin continues to rise in popularity among traders. Some bitcoin investors see the cryptocurrency as a safe haven against inflation and pricey stocks and bonds. Others see it simply as a short-term momentum trade. But does bitcoin actually have any intrinsic value at all?

The short answer is no.


Bitcoin's Value Problem

But that doesn’t necessarily mean bitcoin is a bad investment. Gold also has no intrinsic value. Gold cannot be eaten. It has minimal usefulness as a building material or weapon. Gold is only valuable because humans have treated it as such for centuries.

Like gold, bitcoin’s price fluctuations are dictated by supply and demand. Unlike centralized global currencies, such as the U.S. dollar, bitcoin’s supply is fixed and capped, leaving demand as the sole variable in the equation. But even that one variable is extremely unpredictable.


https://www.benzinga.com/analyst-ratings/analyst-color/17/08/9863811/does-bitcoin-actually-hold-any-value-at-all

Cryptocurrency Market Capitalizations.

All Cryptocurrencies.


https://coinmarketcap.com/all/views/all/

I hope this info is helpful.

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Charles
 Posted: Dec 10 2017, 05:44 PM
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Thanks Bear

--------------------
"If you don't read the newspaper you are uninformed,
if you do read the newspaper you are misinformed."
- Mark Twain



"A government which robs Peter to pay Paul can always depend on the support of Paul." - George Bernard Shaw
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