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What is Bitcoin?
Bitcoin is a new currency that was created in 2009 by Satoshi Nakamoto. Transactions are made with no middle men – meaning, no banks! There are no transaction fees and no need to give your real name. More merchants are beginning to accept them: you can buy webhosting services, pizza or even manicures. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.
Interesting facts about Bitcoin. Bitcoin is a digital currency. Because it is digital, you can literally backup your money, so, when properly cared for, it can’t be lost, stolen, frozen or seized. No banks, governments, or organizations control or influence it. It cannot be counterfeited, inflated, printed, or devalued over time. Bitcoin allows a direct and immediate transfer of value between two people anywhere in the world. People can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally. Bitcoin operates on free, open-source software on any computer or smart phone. Purchases can be completely anonymous. Privacy is enhanced with Bitcoin and it reduces identity theft. Bitcoins can be exchanged in open markets for any other currency.
There are many online vendors who are trading in Bitcoins, such as BIPS, Bitbox, MtGox, bitNZ, Bitstamp, BTC-E, VertEx, etc. Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Mt. Gox is the largest bitcoin exchange.
People compete to “mine” bitcoins using computers to solve complex math puzzles. Currently, a winner is rewarded with 25 bitcoins roughly every 10 minutes.
Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Unlike bank accounts, bitcoin wallets are not insured by the FDIC. Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.
No one knows what will become of bitcoin. It is mostly unregulated, but that could change. Bitcoins work the same as paper money with some key differences. The Bitcoin price fluctuates so, if you invest wisely, you can make a decent amount of money by selling and buying them. Several business accept Bitcoin as a form of payment for services like Internet and mobile services, design, web hosting, email services, and VOIP/SMS services, as well as gambling sites. So Bitcoin can be used in many services as a made of payment.
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