What is a Bitcoin?

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Bitcoin is a peer-to-peer currency. Peer-to-peer means that no central authority issues new money or tracks transactions. These tasks are managed collectively by the network.

A Bitcoin is the base currency of the Bitcoin market. It is like how we reference a Dollar or a Euro, and like the different currencies in the world, the Bitcoin trades at different values based primarily on speculation, supply and demand.

One of the most attractive features of Bitcoins is that they are not controlled by any government. They cannot be artificially inflated or deflated. A monetary authority cannot pump more of them into the market to boost the economy. Basically, there is a set amount going out over time and as time goes on the amount entering the market decreases.

The way that they are entered into the market is a process called “Mining”. Basically, computers solve mathematical algorithms to earn the Bitcoins. They are very complex and take a lot of computing power to solve. The more computers trying to solve the equations, the harder the equations become to solve, the less you get for mining.

Here is a video by Ben Swann on Bitcoin:

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  1. Okay, but how does solving an algorithm create monetary value, aka Bitcoin? And what is the deal with finding hashes?” And finally, where do the algorithms come from to begin with? (private interprise, government, education?)

    Thanks in advance for your response.

  2. If the algorithms to earn bitcoins is very complex and you use many computers trying to solve the equations, why would they become harder to solve earning you LESS from mining?

    I understand the concept is to prevent someone with 1000 computers from becoming bitcoin millionaires.

    however, then why do you recommend people join a POOL? If you have a pool of 1000 people won’t they earn less and less?

  3. Hello,
    I am knew to bit coins I would like to know if 520 khash/s is bad. I would also like to know if you know how to overclock my GPU. I have an AMD Radeon HD 6620G. Thank you.

    Best Regards,
    Brandon G

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  5. How do you invest/put money in? SOmeone told me can only send cash? Can you not electronically take out of my bank account or send a check? sending cash seems crazy and risky to me

  6. BITCOIN is so exciting… You know how it feels to get away with doing something illegal/clandestine/wrong? That is how Bitcoin feels to me. The greatest part about that… it’s real MONEY!

    Very helpful site. Keep up the good work. I’ll keep coming back…

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