Bitcoins are surprisingly still a mystery to many people. This form of internet currency has been around since 2008 and was an open-source project invented by Satoshi Nakamoto, a person whose identity is the source of much speculation.
Bitcoins are a form of digital currency with a decentralised administration completely based on code. Bitcoins gained a following among computer programmers, but more and more people of different backgrounds are starting to accept it as a legitimate form of currency.
Beginners who want to start dealing in Bitcoins can start by buying them from a broker. Bitbroker, for example, provides services such as Bitcoin conversion into GBP and vice versa.
Understanding the Inner Workings of Bitcoin
Bitcoins do not have a centralised administration – it has no gold reserves and no government dictating its value. As an open currency system, the supply growth is dictated by complex computations.
To produce more Bitcoins, a system called the block chain is used. Whenever a new transaction takes place, the data runs through an online ledger that receives verification from volunteers called ‘miners’.
Each validated block mints new Bitcoins. A block of transactions equivalent to 10 minutes typically generates 25 new Bitcoins, which roughly converts to 290.30 GBP.
The job of Bitcoin miners is no easy feat: specialised computers verify the ledger, confirming the validity of each block of transactions. Each block links to the one before it using strict timestamps, which prevents tampering.
If someone alters just one block, the entire chain becomes invalid. As the chain grows, the more difficult it becomes to cheat the system. This prevents collapse and keeps fraudsters at bay. The Bitcoin system is so safe that even law enforcers use it to track down criminal transactions.
Taking the First Step
A beginner who wants to trade in Bitcoins has it easy: Just open a digital wallet and exchange cash for Bitcoins. A broker can help with this form of transaction. Alternatively, you can also sell goods for Bitcoins.
A special key that only the user knows confirms the transaction. Just like your ATM PIN, the key prevents the theft of your Bitcoins. Using the technology is incredibly simple.