Gerald Lee Jordan MBA, MEd, MCouns

Bitcoin

Cryptocurrencies

Bitcoin is a cryptocurrency. Cryptocurrencies are value (money) saved in electronic form on computers globally. They can be exchanged (bought and sold) with other cryptocurrencies and with fiat currencies (traditional currencies, such as the USD or NZD). Some merchants also accept them as payment for goods and services. There is no “paper” version, with value being transferred from one address (where amounts are stored) to another.

Bitcoin

Bitcoin started it all in the cryptocurrency space. Yes, there were earlier attempts, but none of them were able to resolve the outstanding issues - such as the "double spend" problem. This problem was basically that a person could "spend" online money (cryptocurrency) and then quickly try to "spend" this same amount again. Bitcoin solved this problem by creating a consensus network, where a group of computers had to all agree on transactions. This innovation allowed Bitcoin to become the first viable cryptocurrency and all other subsequent virtual currencies are referred to as "alt-coins" (alternate coins, because they are not Bitcoin).

Computers around the world have copies of the Bitcoin ledger. This is a copy of all Bitcoin transactions to date, including the mining rewards (every ten minutes a computer running Bitcoin is given a reward for running the software, with the reward going to the computer that first solves a mathematical calculation). When a new transaction is presented, computers around the world add the transaction, with a group of transactions taking place in ten minutes and then these agreed transactions are added to the ledger. If computers in the network end up with different transactions for that ten minutes, the network looks for consensus (agreement) and accepts the group of transactions (called a “block”) that are agreed to by the majority of computers running the Bitcoin software (these computers are referred to as "nodes").

So, multiple computers running the Bitcoin software, looking for transactions and agreement on transaction history within ten minutes, all while trying to solve a mathematical puzzle first in order to get the block reward of Bitcoins. It can get more complex than this, but this is a view from 30,000 feet.

History of Bitcoin

Books have been written about the history of Bitcoin, so it will be kept brief here. A whitepaper for a new cryptocurrency was released in October 2008 by a mysterious (and still unknown) Satoshi Nakamoto. This paper outlined how Bitcoin would work. In January of 2009, Satoshi mined the first block of the Bitcoin blockchain, referred to as the "genesis block". Uptake was slow at first, but over time individuals, businesses and governments got involved. Bitcoin is now a global medium of exchange that has spawned hundreds (if not thousands) of other cryptocurrencies. Again, a view from 30,0000 feet of a fascinating and complex topic - something we will explore much more on this site.

Bitcoin: A Peer-to-Peer Electronic Cash System

The original whitepaper by Satoshi is provided:

Bitcoin: A Peer-to-Peer Electronic Cash System

Where to Find Bitcoin Software

If you want to run the full Bitcoin software, this can be found at https://bitcoincore.org. You will download the entire history of transactions and your computer will be confirming transactions, so be ready to share processing power and connectivity to keep the network going and strong.

If you just want to buy and sell a bit to see how you go, you can purchase from exchanges (not all as reputable as others) or you can download a Bitcoin wallet to exchange cryptocurrencies directly with others.

Where to Find Bitcoin Exchanges

One list of exchanges found at bitcoin.org is here.

Bitcoin Current Value