WHITE_PAPER_ON_CRYPTOCURRENCY_and_BITCOIN.pdf

(146 KB) Pobierz
WHITE PAPER ON
CRYPTOCURRENCY
& BITCOIN
Prepared By Alfred NTAGANDA
12
th
October 2020
As technology is advancing, some new technologies are coming in place these include artific ia l
intelligence and machine learning with these bitcoin comes in for better online currency
management but it’s not fully or in some countries is not yet legalized due to fear of its security
its virtually uncontrolled. It is doubtful to fully put your currency in this technology when one
part of it is not controlled if disputes arises it will be a challenge for both parties when one end
is not controlled.
Done November 30.2017
Bitcoin – the virtual banking currency of the internet – has existed for several years now and
many people have questions about them. Where do they come from? Are they legal? Where
can you get them? Why did they split into Bitcoin and Bitcoin Cash? Here are the basics you
need to know.
What Is A Cryptocurrency?
Cryptocurrencies are just lines of computer code that hold monetary value. Those lines of code
are created by electricity and high-performance computers.
Cryptocurrency is also known as digital currency. Either way, it is a form of digital public money
that is created by painstaking mathematical computations and policed by millions of computer
users called 'miners'. Physically, there is nothing to hold.
'Crypto' comes from the word cryptography, the security process used to protect transactions
that send the lines of code out for purchases. Cryptography also controls the creation of new
'coins', the term used to describe specific amounts of code.
Governments have no control over the creation of cryptocurrencies, which is what initially made
them so popular. Most cryptocurrencies begin with a market cap in mind, which means that their
production will decrease over time thus, ideally, making any particular coin more valuable in
the future.
What Are Bitcoins?
Bitcoin was the first cryptocoin currency ever invented. No one knows exactly who created it
– cryptocurrencies are designed for maximum anonymity – but bitcoins first appeared in 2009
from a developer supposedly named Satoshi Nakamoto.
He has since disappeared and left behind a Bitcoin fortune.Because Bitcoin was the first
cryptocurrency to exist, all digital currencies created since then are called Altcoins, or alternative
coins. Litecoin, Peercoin, Feathercoin, Ethereum and hundreds of other coins are all Altcoins
because they are not Bitcoin.
One of the advantages of Bitcoin is that it can be stored offline on a person's local hardware. That
process is called cold storage and it protects the currency from being taken by others. When
the currency is stored on the internet somewhere (hot storage), there is high risk of it being
stolen.
On the flip side, if a person loses access to the hardware that contains the bitcoins, the currency
is simply gone forever. It's estimated that as much as $30 billion in bitcoins have been lost or
misplaced by miners and investors. Nonetheless, Bitcoins remain incredibly popular as the most
famous cryptocurrency over time.
Why Bitcoins Are So Controversial
Various reasons have converged to make Bitcoin currency a real media sensation.
From 2011-2013, criminal traders made bitcoins famous by buying them in batches of millio ns
of dollars so they could move money outside of the eyes of law enforcement. Subsequently,
the value of bitcoins skyrocketed.
Ultimately, though, bitcoins and altcoins are highly controversial because they take the power
of making money away from central federal banks, and give it to the general public. Bitcoin
accounts cannot be frozen or examined by taxmen, and middleman banks are completely
unnecessary for bitcoins to move.
Law enforcement and bankers see bitcoins as 'gold nuggets in the wild, wild west', beyond the
control of traditional police and financial institutions.
HowBitcoinsWork
Bitcoins are completely virtual coins designed to be 'self-contained' for their value, with no
need for banks to move and store the money. Once you own bitcoins, they behave like physica l
gold coins: they possess value and trade just as if they were nuggets of gold in your pocket.
You can use your bitcoins to purchase goods and services online, or you can tuck them away
and hope that their value increases over the years. Bitcoins are traded from one personal 'wallet'
to another.
A wallet is a small personal database that you store on your computer drive (i.e cold storage),
on your smartphone, on your tablet, or somewhere in the cloud (hot storage).
For all intents, bitcoins are forgery-resistant. It is so computationally intensive to create a
bitcoin; it is not financially worth it for counterfeiters to manipulate the system.
Bitcoin Values and Regulations
A single bitcoin varies in value daily; you can check places like Coindesk to see today's value.
There are more than two billion dollars worth of bitcoins in existence. Bitcoins will stop being
created when the total number reaches 21 billion coins, which will be sometime around the
year 2040. As of 2017, more than half of those bitcoins had been created.
Bitcoin currency is completely unregulated and completely decentralized. There is no national
bank or national mint, and there is no depositor insurance coverage. The currency itself is self-
contained and un-collateraled, meaning that there is no precious metal behind the bitcoins; the
value of each bitcoin resides within each bitcoin itself.
Bitcoins are stewarded by 'miners', the massive network of people who contribute their personal
computers to the Bitcoin network. Miners act as a swarm of ledger keepers and auditors for
Bitcoin transactions. Miners are paid for their accounting work by earning new bitcoins for each
week they contribute to the network.
How Bitcoins Are Tracked
A Bitcoin holds a very simple data ledger file called a blockchain. Each blockchain is unique
to each individual user and his/her personal bitcoin wallet.
All bitcoin transactions are logged and made available in a public ledger, helping ensure their
authenticity and preventing fraud. This process helps to prevent transactions from being
duplicated and people from copying bitcoins.
Note: While every Bitcoin records the digital address of every wallet it touches, the bitcoin
system does NOT record the names of the individuals who own wallets. In practical terms, this
means that every bitcoin transaction is digitally confirmed but is completely anonymous at the
same time.
Therefore, although people cannot easily see your personal identity, they can see the history of
your bitcoin wallet. This is a good thing, as a public history adds transparency and security,
helps deter people from using bitcoins for dubious or illegal purposes.
Banking or Other Fees to Use Bitcoins
There are very small fees to use bitcoins. However, there are no ongoing banking fees with
bitcoin and other cryptocurrency because there are no banks involved. Instead, you will pay
small fees to three groups of bitcoin services: the servers (nodes) who support the network of
miners, the online exchanges that convert your bitcoins into dollars, and the mining pools you
join.
The owners of some server nodes will charge one-time transaction fees of a few cents every
time you send money across their nodes, and online exchanges will similarly charge when you
cash your bitcoins in for dollars or euros. Additionally, most mining pools will either charge a
small one percent support fee or ask for a small donation from the people who join their pools.
In the end, while there are nominal costs to use Bitcoin, the transaction fees and mining pool
donations are much cheaper than conventional banking or wire transfer fees.
Bitcoin Production Facts
Bitcoins can be 'minted' by anyone in the general public who has a strong computer. Bitcoins
are made through a very interesting self-limiting system called cryptocurrency mining and the
people who mine these coins are called miners. It is self-limiting because only 21 million total
bitcoins will ever be allowed to exist, with approximately 11 million of those Bitcoins already
mined and in current circulation.
Bitcoin mining involves commanding your home computer to work around the clock to solve
'proof-of-work' problems (computationally intensive math problems). Each bitcoin math
problem has a set of possible 64-digit solutions. Your desktop computer, if it works nonstop,
might be able to solve one bitcoin problem in two to three days, likely longer.
For a single personal computer mining bitcoins, you may earn perhaps 50 cents to 75 cents
USD per day, minus your electricity costs.

Plik z chomika:

Inne pliki z tego folderu:

Inne foldery tego chomika:

Zgłoś jeśli naruszono regulamin