What is Bitcoin?
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What is Bitcoin?

Bitcoin was originally proposed in a white
paper written by an anonymous person or persons named Satoshi Nakamoto. The protocol of the actual software was released
in 2009 and that’s when the bitcoins were first minted. Bitcoin is issued by a decentralized network. There are a series of protocols just like
there are for email that tell computers how to interact with each other. It’s a program that runs like any other,
and the network spits out a certain amount of bitcoin every ten minutes. So, in the beginning days it was 50 bitcoin
were created every 10 minutes. Currently it’s 12.5 that are created every
10 minutes. Currently in existence, there are 15 million
bitcoins and these bitcoins will asymptotically approach 21 million in the year 2100 and every
four years, approximately, the number of bitcoins that are created halves. Technically speaking, there are no bitcoin. Bitcoin is simply a way of saying that one
person has transferred value to another person. And so, the computer network basically says
there’s these 50 units and first these 50 units get assigned to Person A, that’s the
miner, that’s the first person who mines them out of the ground. Then that person maybe transfers three bitcoins
to Person B. So now if Person B has that amount on his ledger, it shows that he’s credited
that amount. So blockchain technology is essentially a
ledger system, a list of addresses and a certain amount of bitcoin with each of those addresses
and anyone can see it. Unless you’re able to tie someone’s identity
to that address, you’re unable to know who has what. So the fact that anyone can see it and download
it onto their computer means that there’s no central fail points. That’s the premise under which blockchain
really operates. What really differentiates bitcoin as a currency
is: 1) it’s created on a predetermined schedule- the kind of system that Milton Friedman envisioned
in his monetarist world of having a computer run the central bank. It’s not beholden to any political whims. There are thousands of merchants around the
world that accept bitcoin: Microsoft, XBOX, websites like Overstock.com, just like Amazon. It’s getting more accessible to be able
to live and spend bitcoins, but the reality is that bitcoin is still this niche internet
money. There have been no central banks that have
decided to create some kind of exchange rate with bitcoin. No country has adopted bitcoin as its national
currency, but they have all expressed a lot of interest and written a lot about what digital
currencies means for them. So there’s something fascinating about bitcoin. An idea that has captivated millions around
the world and has, if nothing else, given us an ability to think more clearly about
understanding of currency, but is opening up all sorts of interesting discussions based
on the underlying technology into things like how we contract, the extent to which computers
should run our financial system, and it’s really given us an interesting lens into understanding
how society functions.


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