Explain Bitcoin in the simplest way possible.?
- Anonymous1 year agoFavorite Answer
Bitcoin is non-physical, digital/virtual currency that is stored in programs/apps that are known as "wallets". You either earn it by having your super computer/smartphone solve math problems that require a long time to solve (a process known as mining), by trading other currencies (physical or virtual) for it or by having someone send it to you as a gift.
These math problems are not difficult in the sense that they require godly math knowledge. The computer only guesses until the required solution is found, but it will be millions of times faster than a human solving it by hand because the number of guesses made before finding the correct solution is huge. For every correct solution (called a block) your computer finds, you will be rewarded a set amount of bitcoins.
Bitcoin is not bound or regulated by the laws of any country. To prevent people from lying about the amounts of bitcoin they have, the amount of bitcoin every person has is publicly recorded in a structure called the blockchain. This is a figurative chain of all correct solutions (blocks). The blockchain is constantly expanding in an unique manner as different people add blocks to it. But before its added to the previous block, the block you find is verified as the correct on by all bitcoin miners in the network to prevent people from trying to exploit or "hack" it.
The reward you get from adding a block is newly created bitcoin. However, to prevent its value being decreased because of inflation, it has been decided that the amount of bitcoin in existence will not exceed 21 million. Today there is 17.5 million in existence, so only 3.5 million more can be created by mining. Because its supply is fixed, its price will be decided by how much people demand it. Assuming the demand slowly grows, so will its value.
I mentioned that you could trade bitcoin. Just like the mining of blocks is recorded in the blockchain, the transactions between people is also recorded to make sure no one is lying about the amount of bitcoin they have in their "wallet", have sent to someone else or have received. These transactions are also verified by other bitcoin users in the form of math problems. The one who verifies it first earns a transaction fee as a reward (a part of the transaction). The fee is decided by the person making the transaction. The priority and speed of their transaction will be decided by how much they are willing to reward others for verifying it as legit.
People are willing to use bitcoin because it is safe, very hard to trace, easy and effective to transfer (transferring it either to Europe or Africa makes no difference) and it is not under the control of any sort of outside authority [There is no bank to use it for its own benefit, the government cannot just take it from you for political or legal reasons. You decided how to use it]. Even though people may know how much bitcoin you have, they don't know any other sensitive information about you at all.
Of course, it has disadvantages as well. You would need multiple very powerful computers [Thousands of people are racing against you to find the correct solution] and very cheap electricity, otherwise you'd be losing more than you'd earn. Another possible disadvantage is the fact that bitcoin transactions are irreversible. If you sent bitcoin to someone, you can't just undo the process.Source(s): This is just my understanding of everything.
- 11 months ago
to be honest ,someone have gone so far as to say that bitcoin is worthless ,can't converted into other currency
- Anonymous1 year ago
A coin which you and even the central bankers can't see it
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- 1 year ago
Bitcoin is electronic currency that is not administered by any central authority. Transactions happen between any two parties on the bitcoin network.
- JimLv 71 year ago
Huge amounts of computing are used to generate a small number of random numbers which are then traded based on their rarity by people to slow to think there could be an infinite number of random number generating systems.