The basics of bitcoins

TradingPub Admin | May 6, 2013

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Bitcoin basics
Bitcoins are a form of alternative currency that have been generating visibility in the recent past. This currency is different from any other in that it exists only digitally, is not issued by a financial institution like a central bank and is anonymous, according to Business Insider.

These bitcoins are not brand new, as they were originally created in 2009, according to Moneyweb. It started out as simply being a side project of sorts, and an unidentified person or group published the original specifications for these items under the name Satoshi Nakamoto.

Ways to get these coins
If you are interested in owning bitcoins, you have the option to not only buy them, but also to earn them by having your computer solve puzzles in an effort to uncover numbers that contain 64 digits, Business Insider reports.

There are certain caveats involved in this form of currency, as only 21 million of these can be created under the existing rules, according to Business Insider. Since finding one of these 64-digit numbers provides the winner with 25 bitcoins, which at the time of report was worth close to $1,100, there is significant incentive for individuals to donate the resources of their computers to solve these puzzles.

Since the challenges that must be overcome in order to unlock these bitcoins are highly complex, individuals have frequently teamed up to combine their resources and work toward solving the puzzles, the media outlet reports. Such scenarios involve the combination of multiple people, and therefore any rewards realized will need to be split up between a large number of participants.

The total circulation of 21 million of these coins, which will signify the limit for the virtual currency, is not scheduled to be reached until 2140, according to Business Insider. This has been created as a result of 25 bitcoins being created at the end of every 10-minute block. As a result of the maximum limit that has been placed on the coins, the system has been designed to prevent inflation from happening.

It is important to note that it is possible to exchange these coins for more traditional currencies, and that this can be done through different exchanges, for example Mt.Gox, the media outlet reports.

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