What is Bitcoin?

What+is+Bitcoin%3F

Tre Aulson

Many people still have no clue what bitcoin is, how it works, and what it’s useful for. Bitcoins are long computer codes that are inside a network (application/program) that anyone can get on their computer. When you run the network on your computer, you are donating your computer’s computing power to the network by solving complex codes. These codes that your computer is solving are others who own bitcoin trying to transfer it to one another throughout the network (making payments, selling bitcoin/trading it etc). Every time a coin is transferred, the network makes a note of where it was and where it went in the form of complex numbers. 

 

In order for the coin to be transferred, it needs to make a certain amount of network connections, basically confirming the equations and making sure everything checks out and nothing has been changed or altered. People are incentivized to run the program because they are paid out in small amounts of bitcoin for every transaction they confirm. These small amounts of bitcoin are called satoshis (1 Satoshi = 0.00000001 ฿). When confirming transactions the network automatically updates itself informing all computers of the new change in code. 

 

Bitcoin is very secure because no government can take hold of the network, and if a hacker tried to change the code, the other computers in the network would correct it. The only way for bitcoin to be altered would be if a hacker had taken control of over half the computers running the network to make a change which then would update all other computers running the program tricking them to think whatever change was made was real. The more computers using the network, the more secure it is, making it harder to get control of (for example, 500 computers rather than 50). This process is a lot more complex than as it was described above, but that’s the general idea.

 

A practical use of bitcoin besides payment is security for people in small/underdeveloped countries which may not have stable governments (countries in Africa/South America) or people who fear that their country’s currency could become inflated or phased out completely. If a tragedy or something like this were to happen, people who own bitcoin will have an easier time leaving to go to another country because they can easily in the matter of minutes transfer their bitcoin to other currencies. Bitcoin works as a decentralized currency which means that no government can control it, but it will never serve as a universal currency as it needs governments with established currencies to be exchanged for bitcoin which gives it value. 

 

In the past decade, bitcoin has had many ups and downs, but this run looks like it will be up in the clouds for a while. In the past 5 months bitcoin’s market cap grew from 400 billion passing 1 trillion.