What is Bitcoin (BTC)?
Bitcoin, abbreviated BTC is a decentralized digital currency created by the pseudonymous entity Satoshi Nakamoto. BTC can be saved on a personal computer in the form of a wallet file or can be managed by a third party wallet service. In both cases money can be transferred over the internet by anyone with a Bitcoin address. Currently Bitcoin is the most widely used cryptocurrency reaching a total market cap of 1 billion US dollars in April 2013.
BTC has no central issuer; instead, the peer-to-peer network regulates BTC’ balances, transactions and issuance according to consensus in network software. Bitcoins are issued to various nodes that verify transactions through computing power; it is established that there will be a limited and scheduled release of no more than 21 million coins, which will be fully issued by the year 2140. The peer to peer topology of BTC and a lack of central administration makes it virtually impossible for a government or anyone else to manipulate the value of BTC or induce more inflation to what has been specified at the start. The design allows for anonymous ownership and transfer of value.
BTC must be mined like gold, and therefore money. Every day there are a certain amount of BTC released to the ones mining them. This is done by using the computing power of computers or other devices. Since solo mining is not efficient anymore may so called “mining pools” have been created over the internet where all the computational power of the miners is combined. The mining pool then pays out according to the miners share. Mining pools use different types of payment which can be found here.
Bitcoin was founded on the 3th of January 2009.
The official Bitcoin client can be found here
- 50 Coin reward per block
- 21 million coins will be available
- Block target is 10 minutes so a new block is generated every 10 minutes on average
- Difficulty adjusts every 2016 blocks, approximately every 14 days
- Hashing protocol is SHA-256
- Launch date: January 3rd, 2009
Early Bitcoin clients allowed CPU mining but this functionality was disabled in the client when GPU mining became the standard. GPU mining is way more efficient then CPU mining GPU mining started to become the standard in early 2010 and remained for more then a year until FPGA miners were developed. FPGA mining was more efficient and became a good alternative for GPU mining, however, GPU mining was still viable for a lot of miners. In Early 2013 the first ASIC mining hardware was being shipped. ASICs are again much more efficient then GPUs and FPGAs they have much better hashrate to watt ratio and thus making it more electricity efficient to mine bitcoins. Because most of the ASIC manufacturers have problems at the moment GPU mining is still alive but due to the high electricity cost not efficient in most countries. You can check your video cards performance here and find out with this Bitcoin profitability calculator whether it is efficient or not. Off course, when you have all in rent and are not paying for electricity it is always profitable to mine if you have the GPU already. In general AMD GPUs are way more efficient then NVIDIA GPUs.
If you want to get started with GPU mining then you can check my Bitcoin GPU Mining guide here.
Bitcoin Exchange rates
Current and historic exchange rates can be found below.
BTC exchanges allow bitcoins to be traded for real live currencies or other cryptocurrencies. The largest ones are listed here. However, there are many smaller ones which can be found at bitcoinwatch. You may have to review a few for the funding options of your linking, Mt.Gox supports many overall.
The Bitcoin client can be downloaded from http://bitcoin.org, I advise you to download Multibit as this will save a lot of time synchronizing with the network and saving you a lot of hard-drive space.
Here’s a basic video about bitcoin: