With the wannacry and petya attacks we have recently experienced I have been asked the question to explain Bitcoin.
What Are Bitcoins?
Bitcoins are electronic currency, also known as ‘cryptocurrency’ /digital public money / a virtual coin designed to be ‘self-contained’ for their value, with no need for banks to move and store the money.
Bitcoins are created by computer users , using complex mathematical computations and policed by millions of computer users called ‘miners’.
Once you own bitcoins, they behave like physical gold coins: they possess value and trade just as if they were nuggets of gold in your pocket.
You can use your bitcoins to purchase goods and services online, or you can put them away and hope that their value increases over the years.
Bitcoins are traded from one personal ‘wallet’ to another.
A wallet is a small personal database that you store on your computer drive, on your smartphone, on your tablet, or somewhere in the cloud.
Bitcoins can be ‘minted’/ made by anyone who has a strong computer by ‘mining’.
Bitcoin mining involves commanding your home computer to work around the clock to solve ‘proof-of-work’ problems (computationally-intensive math problems).
Each bitcoin math problem has a set of possible 64-digit solutions. Your desktop computer, if it works nonstop, might be able to solve one bitcoin problem in two to three days, likely longer.
Using a single personal computer mining bitcoins, you could earn perhaps 50 cents to 75 cents USD per day, minus your electricity costs.
For a very large-scale miner who runs 36 powerful computers simultaneously, that person can earn up to $500 USD per day, after costs.
Your bitcoins are stored on a computer device of your choice, but the history of each bitcoin you own or spend is publicly stored on the bitcoin network, and every user will be able to see every bitcoin’s history.
While people cannot easily see your personal identity, people can see the history of your bitcoin wallet.