What are Bitcoins
Bitcoins are an electronic currency, and one of their typical features is that there is no central organ that issues them, but they use a distributed database between the network nodes that tracks transactions, a process known as Blockchain, which is a communication protocol that identifies a technology based on the logic of the distributed database. A database in which data is not stored on a single computer but on several machines connected to each other, called nodes.
Bitcoins, therefore, are a currency that does not have an owner and does not exist physically, but can be used for payments, just as if it were a physical currency.
Their value, then, is established on the basis of complex calculations, and their market is quite narrow, in addition to the fact that the growth of this currency is controllable and established a priori, which makes it immune from fluctuations related to monetary policies, and allows to establish a certain level of inflation.
Bitcoin is one of the first realizations of a concept defined as Cryptocurrency, i.e. an equal, decentralized digital currency whose implementation is based on the principles of cryptography to validate transactions and the generation of currency itself, first described in 1998 by Wei Dai on a mailing list.
The intention was to create a currency that was independent of any authority and that would, therefore, allow electronic payments on a global scale to be made quickly and anonymously, with which real objects could be bought.
This type of currency, therefore, exists only virtually and has no physical correspondence. This has created a number of problems in terms of trust, so much so that the currency has been banned in some countries.
The Bitcoin exchange mode, in fact, provides for the absence of a controlling authority and transfers are defined as an exchange of ownership of the currency.
This peculiarity prevents the cancellation of a transaction and the repossession of the transferred Bitcoins, also because the transaction is transmitted to the nearest nodes of the network, which then propagate the payment through the network.
Honest nodes, however, reject fraudulent or invalid transactions, which increases the security level of the exchanges made.
The essential characteristic of Bitcoins, then, is that nobody can control their value, thanks to the decentralized method of currency creation.
The amount of currency in circulation is defined a priori and everyone knows about it, and in this way inflation, which is predictable, can be used by a central body to redistribute wealth among users.
In recent times, Bitcoins have performed very well, so much so that some economists are beginning to consider Bitcoins as the currency of the future.
Generating Bitcoins is quite complex. The operation is called Mining, which is the way used by the Bitcoin system and cryptocurrencies in general to issue currency. It used to be free, now you can only do it if you have specialized hardware for Bitcoin extraction. Generally if you belong to a Pool, i.e. a network specialized in the creation of Bitcoin, you must provide it with some computing resources of our computer. The process requires, in fact, a very high computing power. In this way you go to decrypt the algorithms at the base of Bitcoins. Obviously it is also possible to buy them by exchanging them with the euro, on the Net or in physical counters.
In the opinion of many Bitcoins do not have a future because they are not easily regularizable, but in the opinion of others this is the currency of the future. It is no coincidence that the value of Bitcoins has risen in recent times.
The Chinese government, after putting limits on Bitcoins to avoid speculation, has no longer hindered this virtual currency. Brexit and uncertainty about the future of the European Union are scenarios that could increase the potential value of Bitcoins. Russell Newton, former head of JP Morgan, has predicted an imminent break in the euro project, and for him the Bitcoins will fill the void left by the abandonment of the single currency in the European states.
What marks Bitcoin’s growth is the fact that many investors are betting everything on virtual currency. It is more convenient, and being digital, it is easier to exchange. Bitcoins outweigh the value of gold in trade, and the last time the virtual currency succeeded, it suffered a major collapse, but experts are confident that the value of Bitcoins will increase even more over time.
The Bitcoin-based economy is still very small, compared to long-established economies, and the software is still in a beta release state, i.e. it is a version of a software that is not final, but already tested by experts, which is made available to a greater number of users, relying on their unpredictable actions that could bring to light new bugs or incompatibility of the software itself.
Nevertheless, real goods and services, such as, for example, used cars or software development contracts, are already marketed in Bitcoin.