How to make money from cryptocurrency
Bitcoin - what it is in the simplest terms
When I decided to figure out what bitcoins are, I spent a long time searching for information all over the web. But all the explanations like "in simple words" only created more confusion in my head. So then I did my own research.
And if you now, as I did once, don't understand the essence of bitcoin - whether it's a scam or not, and whether you can make money on it, and how it all works - then take five minutes to read this article. I promise you won't have any more questions.
Article content:
What bitcoins are in simple terms
Where do bitcoins come from?
Why is bitcoin worth more than gold?
Frequent questions about bitcoins
Bitcoins: fraud or not?
Is it possible to make money on bitcoins?
Why do celebrities buy bitcoins?
Why is it so hard to explain what bitcoins are?
Conclusion - What will happen to bitcoin in the future
And let's get the math straight first. Where do bitcoins even come from, and what are they? Who "prints" them? And if no one - then why the hell is all this stuff called currency?
What are bitcoins in simple terms?
Basically, a bitcoin is an ordinary computer program. Only it is not located on a single computer or server, but is shared by millions of computers, which communicate directly with each other through this program.
Torrents work in a similar way. You install the program in your room, and someone else does the same. You can then send files to each other directly, without any servers involved, and with virtually no control. It is this feature that has made torrents the main hotbed of Internet piracy.
The bitcoin system works in exactly the same way. Only its purpose is not to transfer files between users, but to give them "virtual points.
Where Bitcoins come from
Would you keep an extra program on your computer, which gives you nothing? It is unlikely. Therefore, the program "rewards" those users who keep the entire system on their computers. It rewards them with virtual "points", which are called bitcoins.
So you get this interesting phenomenon. The program does nothing useful. It "lies" on users' computers and gives them virtual money for lying there. The program gives out its points for a reason.
The whole system has a limit. It can only give out 21 million virtual points (bitcoins) and not one more. And more and more users are joining the programme every day. Do you know what the only thing this system is programmed to do? It makes it harder to get bitcoins if there are too many users. Or it simplifies the process if you suddenly have too few of them.
What are the bitcoins for?
The people who run the system through their computers are called "miners". And the whole process of "mining" bitcoins is "mining". It does not come from the word "money", but from the word "mine", which means "to mine".
Who are the Bitcoin miners
The whole process of mining boils down to this - the software creates the tasks that the miner's computer has to calculate, and the miner is given virtual money for doing so. That is, literally, the program generates a series of tasks, such as - how many will it be:
34*54 = ?
57+(43-21) = ?
12*34*76 = ?
...
This is a tentative example, of course. The tasks there are much more complicated, and even a computer has to spend time and CPU and graphics card power to solve them. And those tasks are getting harder and harder, because there are more and more miners. And the program does not produce more than 3,600 virtual coins a day.
Accordingly, it regulates itself, and makes sure that the tasks are complex enough. Miners, on the other hand, are building more and more powerful machines in order to be the first to solve the problem and get bitcoins ahead of other miners. They affectionately refer to their problem-solving machines as "farms".
That's the race for their own tails. Miners connect more and more powerful computers to the system to make them count faster. And the system comes up with more and more complicated tasks to give out no more than 3,600 coins a day.
That's basically what the Bitcoin system is all about. On the one hand there is the usual code that comes up with mathematical problems. On the other side, there are "miners", who solve these problems and get virtual bitcoins for it.
But the most interesting is that these "geeky miners" then sell their virtual coins on electronic exchanges for real money. And they do buy! By the way, the value of those "virtual coins" has already exceeded the value of gold. How did that happen?
Why is bitcoin worth more than gold?
The price of any good or service in the world depends on only two factors - supply and demand. If the price goes up, it means that supply cannot keep up with demand. That is, there are many more people who want to buy bitcoins than there are bitcoins.
So, to answer the question of why these virtual, fake coins are so expensive.