Bitcoin Questions
What does an ordinary person know about bitcoins? That they cost a ton of money do not exist in physical form and is somehow connected with video cards. But it is worth digging deeper and trying to figure out the details – and there is so much information that it does not fit in the brain. But not at this time. We promise not to ship, but it is clear to explain all the most important things you need to know about this cryptocurrency.
Bitcoin (BTC for short) is a cryptocurrency. On the one hand, bitcoins are similar to familiar money: they can be exchanged for dollars, euros, rubles, etc. They can pay for a purchase on the Internet or transfer to friends who lack half a bitcoin to pay. They can be stolen. On the other hand, bitcoin has very little in common with the same ruble. He has no physical form – you cannot rustle and ring with bitcoins. And even throwing on plastic is problematic (although attempts are being made – see. What can I buy for bitcoins? ). Bitcoin does not have an issuer – a legal entity that issues it. For example, the ruble issuer is the Central Bank. Roughly speaking, he decides how much money to print, and stores the data about it in his system. Bitcoin has no such solvers. As there is no one place where cryptocurrency data is located. This information is stored on hundreds of computers simultaneously – as torrent files. It turns out that there are no bitcoins, there is only information about their transfer. And bitcoins cannot be faked. So far, at least, no one has succeeded. To fake a wallet for their reception – yes, to steal, using a breach in the protection of the company – yes too. But to create exactly the same monetary unit – nope. And this is the main chip of bitcoin.
What is the difference between the money on my card, which is also quite abstract, and bitcoins?
The main feature and the difference between bitcoin and ordinary currencies are how money is transferred from one person to another. To begin, consider the classic scheme. You have a bank card that is tied to a bank account. The bank records information about the money in the account: how much money was received or debited, where, where and how much. For this, he annually (or even monthly) deducts money from you. Plus, you pay him when transferring money to another account. Shops in which you pay by card also unfasten the bank commission. If the bank decides that the activity on your account is somehow suspicious – it has every right to freeze it. And not only you can withdraw money from your account, but also, for example, a bailiff. As a result, we have a bunch of commissions and the risk that someone will arrest part of your money or freeze the whole account. But Bitcoin will not allow such garbage, because it is not based on a bank, but on a blockchain. And then we came to the very pulp, the very heart of cryptocurrencies. So blockchain. It’s not difficult to figure out what it is. The main thing is to watch your hands. All transactions need to be recorded: who, to whom and how much cryptocurrency transferred.
It is not safe to store information in this form – you need to somehow sign it and assure it so that even the famous Russian hackers cannot forge it. For this, a hash is used in the blockchain. A hash is the result of the process of converting any information (text, sounds, images, etc.) into a set of letters and numbers of a certain length. The same information hashes completely match. But if you change the case of one letter or add extra space, you will get a completely different hash. There are different hashing algorithms, but in the case of bitcoins, one specific one is used – SHA-256. You can play with him here and see what rubbish it turns out. For example, the hash “ Satoshi passed 10 bitcoins to Bill”Looks like this: 011afce5d62f93e44a9e2d8e86bfcdd9a07e8e7f5089e3386258d68f21df83b4. Just hashing does not protect information. Because if any Bill wants to replace the records above 10 bitcoins with 100, then it will be enough for him to generate a new hash and replace it with the old one – no one will detect the substitution (except for Satoshi). Therefore, in the blockchain, the hash of the previous one is added to the records of the fresh transaction.
That is, in each new transaction message in the form of hashes, information about all previous bitcoin transfers is buried. It’s like an archive in an archive in an archive in an archive … Like a snowball. As a chain – hence the name blockchain (translated as “chain of blocks”). And now, to replace one entry, hackers need to shovel all subsequent ones. Otherwise, the substitution will be easy to track.
But this is real if the information is stored on one server. Therefore, information about bitcoins is not stored in one place. It is randomly distributed between hundreds of miner computers – people who provide resources for processing information about bitcoins. And, which is very nice of them, they almost never take a commission for this. For the first time, Satoshi’s transaction information was kept by a Japanese grandfather. In the second, already in the form of a hash – by the Canadian programmer. In the third – in the form of a hash from a Polish hacker. Moreover, all transactions can be observed in the public domain. Over time, transaction information settles deeper and deeper on the blockchain, and it becomes impossible to fake it. After six re-stores, the information is considered reliably protected from changes. As a result, users of the blockchain do not pay a commission and store information about transactions on hundreds of other people’s computers – and no bailiffs can freeze or arrest them.
Can I mine bitcoins myself?
Yes. But as experienced miners believe, newcomers to this business will no longer be able to earn a lot. More money will be spent on the purchase of equipment and payment for electricity. But if you want to mine not for the sake of money, but for the sake of an idea, then it’s never too late to start. Or start mining another, less hype and more rich cryptocurrency (see Bitcoin – the only cryptocurrency? )
How did bitcoins come about?
Their concept was developed by the Japanese Satoshi Nakamoto, who was fond of cryptography. In 2008, he published a scientific paper explaining how cryptocurrency works. It was about hashes, and about blockchain, and much more. In 2009, Satoshi made the first transaction, started selling bitcoins on the exchange and launched a network in which people can exchange them. In 2010, he left the project. What Satoshi looks like, who he is and whether he really existed, the Internet does not know.
What can I buy for bitcoins?
Since banks and the state do not monitor bitcoin transactions, you can buy anything from them: from manually connected socks to a fresh human kidney. Here you can see on the world map who and where accepts cryptocurrencies. These are mainly stores where you can pay online. Paying with bitcoins offline is not very convenient, because it takes about 10 minutes to confirm the payment (the time for which the block is created) – much longer than we are used to. Therefore, they are either converted in advance into a more familiar currency, or withdrawn at bitcoin ATMs (there are some), or use cards that instantly convert cryptocurrencies into regular money.
Why do miners help transfer bitcoins if they do not charge a fee for their services?
Do not worry, miners get money for contributing to the work of the blockchain. We can say they are paid by the creators of bitcoin. True, not personally – the reward for the preservation of information is provided for in the blockchain code. Saving information about the latest, not yet hashed bitcoin transactions is called block creation. For this, the miner receives bitcoins. Initially, the reward was 50 BTC, but every 210,000 blocks it is halved. Now for the creation of the block, miners receive 12.50 BTC. In addition, sometimes a transfer fee will have to be paid – if the message containing information about your transaction weighs more than 1000 bytes. Then the system will request a commission of 0.0001 BTC (15 rubles 3 kopecks at the exchange rate) for every 1000 bytes. But such heavy messages by the standards of the blockchain are very rare (one last week – check for yourself ). Also, the sender can appoint a reward to the miner himself, so that his transaction is processed in the first place.
Why do miners need video cards?
To earn more. Although there are some nuances tied to the nature of bitcoin. Bitcoins are finite. They can be created no more than 21,000,000. When this amount is reached, miners will no longer be given a reward for creating blocks. So that this does not happen too quickly, and Bitcoin inflation does not begin, new blocks can only be created once every 10 minutes. To create a block, the computer needs to solve the problem of selecting a number. Hundreds of computers all over the world are engaged in the solution at the same time, but the block will create only one – the one that first picked the right number. In this, mining is like a lottery. And the more the miner has the capacity to solve the problem (= lottery tickets), the more likely it is he who will create the block and receive a reward. Since the selection of numbers is a monotonous task, video cards do a good job of it. Therefore, they are bought in batches. True, now this is done rather by slow-blowers than seasoned miners. Because creating a farm for mining from video cards is already unprofitable – too much energy is consumed, too little profit. Bitcoin is not a fool either. In order for the blocks to be created stably every 10 minutes, approximately once every 2 weeks it adapts to new capacities. And if in the previous period, miners bought a bunch of equipment and created more blocks than was intended by the creators of the cryptocurrency, the tasks will become more complicated. And their solution will require even more resources.
Is it legal at all?
It depends on the specific country and its laws. But most often it is difficult to give an unambiguous answer to this question. Cryptocurrencies are too new an entity for clumsy legislation. In Russia, the situation is as follows. Article 75 of the Russian Constitution states: “No banks, state bodies, and organizations, including in the regions of Russia, has no right to issue any banknotes, coins, and other monetary units and cash equivalents”. It would seem that everything, finita la comedy, it’s time to take the video cards back to the store. But this line was not enough to ban cryptocurrencies. Therefore, in 2014, the Ministry of Finance prepared a bill, which clarified the concept of “money surrogates” and included cryptocurrencies there directly. And he introduced a bunch of fines, restrictions and slaps with a ruler on his hands, which will stretch in the direction of the blockchain. But the bill was not destined to come true – it turned out too harsh and difficult to implement. Since then chaos reigns: then bitcoins are possible, then it is impossible. Either Roskomnadzor blocks sites with information about them, or it removes the block by a court decision. At least they don’t put him for their use – and thanks for that. But such a suspended state of bitcoin is unlikely to last long. The Ministry of Finance leaves no hope to take control of cryptocurrencies. And, since it was not possible to ban them, it is preparing a bill on their legalization(with subsequent control of the blockchain, of course). Whether he succeeds or not, we will find out. In the meantime, you can mine bitcoins, spend, transfer – and you will be right.
Why are so many bitcoins?
This amount is set by the exchange and depends on people’s interest in bitcoin. And, as you see, he is quite tall. The price is also affected by the resource-intensive cryptocurrency mining process – mining, and shortages, because someday (or rather, in 2140) the release of bitcoins will finally cease.
Is Bitcoin the only cryptocurrency?
The first, but not the only one. There are others ( thousands of them ) with the general name altcoins. They are trying to get rid of the minuses of bitcoin – a finite number of coins and slow transaction processing. The main interest for them is the blockchain with which they are experimenting in every way. But they are still far from the cost and coolness of bitcoin. The most hype alfacoin is Ethereum. The airs are endless and not so much about money, but about the storage of information on the blockchain. In Ethereum, you can create your own applications for storing and transferring documents, stocks, assets, etc.
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