Bitcoin values and
Regulations:
A single Bitcoin varies in value
daily; check places like Coindesk to check current par rates. There are more than $2 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
Traced
A Bitcoin holds a very simple data
ledger file called a blockchain.
Each blockchain is unique to each individual user and his or 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.
While every
Bitcoin records the digital address of every wallet it touches, the Bitcoin
system does not record the names of the people who own wallets. In practical terms, this means that every
Bitcoin transaction is digitally confirmed but is completely anonymous at the
same time.
So, 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, and helps deter
people from using bitcoins for dubious or illegal purposes.
Bitcoin security:
Just like holding a bag of gold coins,
a person who takes reasonable precautions will be safe from having their
personal Bitcoin cache stolen by hackers.
More than hacker
intrusion, the real loss risk with bitcoins revolves around not backing up your
wallet with a failsafe copy. There is an
important .dat file that is updated every time you receive or send bitcoins, so
this .dat file should be copied and stored as a duplicate backup every day you
do Bitcoin transactions.
The collapse of
the Mt. Gox Bitcoin exchange service
was not due to any weakness in the Bitcoin system. Rather,
that organization collapsed because of mismanagement and the company’s
unwillingness to invest in security measures.
Mt. Gox, for all intents and purposes, had a
large bank with no security guards and it paid the price.
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