For those not really acquainted with Bitcoin, you will find much better ways to begin understanding it than this article; I would recommend Wikipedia for starters. This report is intended for all those who already believe they know what Bitcoin is, but haven’t yet traded in it. I was there – I thought I comprehended it, as well, but having since dipped the toe of mine in the pond, I have discovered an unexpectedly enlightening experience. There are so many nuances involved in the trading of Bitcoin as to allow it to be extremely educational. It forced me to give some thought to a great deal of the built-in features which go unscrutinized and perhaps unrecognized in traditional currencies. In so doing, it made me assign my own values to those features, and allowed me to decide the most preferable ways of satisfying my various needs – choices that are typically taken from us.
There are aspects of Bitcoin which make it similar to fiat currency, but it’s not cash. There are aspects similar to gold, but it is not bullion. You’ll find aspects like securities, but it is not really a security. The question of “What is it?” is really a lot more complicated than it appears. It exists solely as an entry in a distributed digital ledger; “having” Bitcoins really means having authority to transfer Bitcoins. No, in fact, that’s not technically correct. It means getting a degree of authority measured in Bitcoins to transfer that equal authority. Try and wrap your brain around that. In the years ahead, I will resort to referring to Bitcoins as the thing of value what is transferred, but understand that my doing this is solely shorthand to make this essay readable. Having Bitcoins is the authority to transfer authority.
Thus, upon deciding to acquire cryptocurrency mining hardware , step one was to figure out how to attain authority to transfer Bitcoins. One could theoretically print out the cryptographic code of a Bitcoin and hand the paper to somebody else as a way of transferring the Bitcoin represented by the code, but how would that recipient know the printout hadn’t been duplicated and already spent? For that matter, how would the receiver know the printout even represented some value in Bitcoin instead of merely a string of random characters? Transferring printouts of Bitcoin on paper may work (albeit inefficiently) between folks who implicitly trust each other, like for gifts between relatives, but the genius of Bitcoin is the distributed but authoritative nature of the ledger of its, and for that to work, transactions have to be exposed to its network.
If a Bitcoin printout is transferred around amongst a team of people without being subjected to the network, not any of them would know whether it was valid or counterfeit. It would be like passing around a bank draft made payable to “Bearer;” it might have been paid, or it could never ever have been great in the first place. No one would be aware of until they made an effort to present it for payment at the maker’s bank. As long as another individual is prepared to accept a potentially-hot potato for services or goods, perhaps it does not matter, but folks tend to be cautious about ending up with hot potatoes. I’m one person that is such, so I wanted the receipt of mine of Bitcoins to be confirmed by the network. This turned the focus of mine to a study of digital Bitcoin “wallets.” Wallets are a digital place to store Bitcoin authority codes.