Although the history of Bitcoin is short (it emerged in 2009), it has rained a lot since its launch. Its creation has always been surrounded by a certain halo of mystery because it is not known who created it. Satoshi Nakamoto is just a pseudonym used by the person or people who gave birth to the project.
But still today, eight years after its creation, Bitcoin is not entirely mainstream. Many have been surprised that the creators of the ransomware that affected Telefónica and other companies wanted to charge in Bitcoin. We will explain everything about this currency.
Bitcoin, technology, and economy
Bitcoin is a very curious technological idea. By combining computer networks, cryptography, and software it is possible to create a fully distributed virtual currency, without the need for a central entity to issue and control it. Eight years later, cryptography remains resilient and the use of Bitcoin has skyrocketed.
The economy behind this currency is the same as the one behind anyone: shortage and trust. That is, there is a solid basis for a Bitcoin to cost money, at least as solid as the one that sets gold prices.
And although Bitcoin was the first cryptocurrency there are many others. It’s true, Bitcoin is still the most popular although lately others like Ethereum are going up in value for other value-added services they offer.
Bitcoin, how to get them
It is clear that if we want to obtain euros, it is enough to work in a country whose currency is euros or go to an exchange office. But how do we get Bitcoin? Of course not working, since it is not an official currency in any country in the world.
The beginnings of any currency are complicated. There must be an issuing bank, people have to trust and accept the currency and gradually it is put into circulation. On the other hand, with Bitcoin, there is no issuer, distributed computers that ensure that the transactions are correct to obtain, from time to time, coins as a prize. This is called mining, and it is the way money is created with Bitcoin.
But before putting our computer to work to create money I have to say that mining is crazy right now. Those who make money with this technique have computer clusters with dedicated graphics cards and in areas where electricity is cheap or even subsidized. Earning money with mining is a thing of the past.
So? Where do we get Bitcoin? Well, as in the real world, in the money exchange houses. There are many on the Internet and they allow us to exchange normal money (euros, for example) for Bitcoins. Coinbase is a site of exchange (and purse, as we will see later) quite popular.
Bitcoin, how to save them
Now we come to the big question: how and where is Bitcoin stored? Well, cryptocurrencies like Bitcoin are completely virtual. To access them originally you had to use the software. This software allows us to see the balance we have in our account and make and receive transfers.
The good thing about Bitcoin is that it is an open protocol, there is much software to manage our money. There is it for Windows, Linux, Mac, Android, iOS … I personally recommend taking it on your mobile and within Android, I like Android Wallet.
However, using software has a danger. If for any reason the device is damaged or erased or formatted, we will lose all the money. Let’s say that with Bitcoin the money is in “the Bitcoin cloud” (the so-called Blockchain ) and what the software saves is a copy of the key to access it. If we use the software it is convenient to make a backup copy of these keys.
Another option to take control of our Bitcoin is to use a web wallet. In this way, a web page is responsible for saving our keys and we will access our accounts with a username and password. Basically what these websites do is the function of a bank.
Coinbase is a good option for this, which also allows you to buy and sell Bitcoins. The only bad thing is that if we use this method we lose part of the grace of having Bitcoins, using a completely decentralized system without relying on trust in any entity. No one can take our money without stealing our keys. On the other hand, if we have money on a website, we have to trust it.
Bitcoin, price swings
Now it may seem that Bitcoin is very expensive, more than 2000 euros to change . And that is not a good time to invest in it. But in the past, we have already seen similar moments, and the advice should be the same: be careful because it is a rather speculative good.
Bitcoin has suffered many potholes along the way. The first was the closure of Silk Road, an illegal exchange market that the FBI closed in 2013. Transactions were made with Bitcoins and the price collapsed.