Bitcoin is electronic cash, but unlike the electronic money you have on your debit card, which is based on a fiduciary currency issued by a government, bitcoins are generated without the need for central authority without the need for governments Or central banks, Generated by persons and for people, generated in a predictable way and not linked to the interests of those who control a central bank.
Unlike fiat money, Bitcoin is finite, and you always know how much money is in circulation, eventually there will be only 21 million Bitcoins, and each Bitcoin is divisible into one hundred million parts, to these parts that are the minimum unit of Bitcoin System Se Referred to as "satoshi". 100 million Satoshis are 1 bitcoin.
Bitcoin is the system, bitcoin is a monetary unit. (Note the use of uppercase and lowercase letters)
Bitcoin is a decentralized consensus protocol. Bitcoin is much more than effective, Bitcoin is a peer-to-peer consensus protocol, this protocol solves a very difficult problem in distributed systems that were previously solved by placing all of the trust in a central entity. In the case of money, we have solved the problem throughout our lives by relying on central entities such as governments, banks and central banks. Satoshi's work shows how it is possible to maintain the state of the system in a distributed way without the need for a central entity. The solution to the problem is the block chain, which is nothing more than the equivalent of a book with all the transactions made by all the participants in the network, a book that is written and distributed to all those who want to have a copy, And that is secured by cryptographic signatures and proof of work. For a detailed explanation of the operation of Bitcoin and the block chain, read Bitcoin: a user-to-user electronic box system
Bitcoin is a digital value storage system. Given the deflationary nature and the difficulty of generating bitcoins, Bitcoin has been gaining value in the minds of the participants. Many have Bitcoins that do not plan to sell while waiting for greater adoption and invention at the top of this technology.
To use Bitcoins you must install an application that serves as a portfolio to store your Bitcoins.
The portfolio allows you to send and receive Bitcoins to any part of the world in a matter of seconds.
Today's Bitcoins are not easy to get, you can get them from another person who has Bitcoins and you pay them with fiat money, and then the person sends you the Bitcoins corresponding to your portfolio.
Then you can spend them buying anything on the Internet, or selling them to someone else, or sending them to someone who buys something, or paying for a service you have done.
Another way to get Bitcoins is to sell things or services on the Internet. You can accept Bitcoins payments on your website, without having to open a business, or open a bank account, because that Bitcoin portfolio is practically a bank in your pocket.
Recommended portfolios
For Android, we recommend that Bitcoin Wallet be the easiest to use, it's like you have a physical portfolio. If you do not make a backup, or your phone is stolen it is like losing the cash.
If you are more paranoid and want to manage the same portfolio from different devices (phones, tablets, computers), you can create a remote portfolio within Blockchain.info. It's a bit more complicated (but not so much), but it's safer. BlockChain.info has one of the most used portfolios in the world. Here is the Android portfolio of BlockChain.info.
Remember not to forget your private key, and not show your private key to anyone. It is best to print a copy of your private key and have it in a safe place, such as a safe.
If you install a wallet on your phone, I do not recommend placing more than you are accustomed to charging normally.
Bitcoin is a user-to-user network
In Bitcoin there is no central place where coins are created, or where there is a record of how much money each portfolio has, or what transactions have been made. In Bitcoin, all network participants, verify transactions, ALL, have a copy of each transaction made. All transactions are public.
When you send $ 15 in Bitcoin to your friend in another country, the application in your wallet tells you how many computers can in this transaction validate the transaction, and these in turn inform other computers, and in a matter of seconds. The computers participating in the network have a copy of the transaction to avoid falsifying the transaction and try to spend the coins again. For more detailed information on how this mechanism works, we recommend that you read the work that explains how the network works.
What are miners?
The computers in charge of validating and re-sending the transactions are known as "Miners". When you send Bitcoins, you have the option to pay a fee so that the miners give priority to the verification of your transaction, although the transactions are immediate, the receiver can not spend the money until a minimum number of miners have confirmed That the transaction is legitimate, if you want to spend the money in less than 10 minutes, then you can pay an optional fee and you decide how much you pay, usually one offers about USD $ 0.25 if you need to process the transaction faster.
In addition to validating transactions, miners are always trying to find a number that represents the next block of transactions, getting this number is the equivalent of turning the page into an accounting book where we will note the next transactions. Finding the next page, or block ... is extremely difficult computationally, and this has a reward, at this time the reward is approximately 50 bitcoins, this is the incentive for people who buy special computers and spend electricity to mine in The Bitcoin network.
The network is programmed to try to generate new blocks in an average time of 10 minutes, if that time goes down, it means that there are faster computers (or more computers) by mining the hash of the next block, once this average time goes down, The network automatically increases the difficulty of the next block so that the average time is adjusted to those 10 minutes. This means that there is more energy consumption and more computing power exists in the network, which benefits the network because it is becoming more difficult to falsify transactions, and having more computers validating transactions, the network will support a much larger volume Of transactions as the economy grows.
In the beginning there were few miners and the difficulty to generate a block in 10 minutes was low, therefore could try to get these numbers using CPUs, as more miners arrived, it was necessary to start to calculate these numbers faster by means of GPUs, Nowadays, there are companies that create specialized hardware known as ASIC (Application Specific Integrated Circuit). If today, end of January 2014 you want to undermine, you will have to spend several thousand dollars to have the necessary power and recover your money in a quarter (if it does not raise the difficulty again by then)
Bitcoin as an investment
You've probably heard about the price volatility of bitcoin, and people who have made lots of money, or lost a lot of money with Bitcoin. Bitcoin is primarily electronic cash, but given how difficult it is to get Bitcoins today, given that there are no government regulations that allow institutions to sell / transfer Bitcoins freely, there are websites that have been created outside the United States (Bitstamp in the UK ) That accept transfers in dollars or euros and allow their users to transfer their Bitcoins to the system, then allowing users to buy and sell Bitcoin to the highest bidder. This is what makes Bitcoin not only a coin, but a commodity that can be bought and sold within a market by many people.
Most people in exchanges are basically betting on price rises and falls, to buy cheap bitcoins, and then sell them at a higher price as fast as they can. Others are people who need to convert large quantities of Bitcoin into fiat cash and try to sell their Bitcoin for the most expensive price possible.
Today's markets are far from being at the professional level of a NASDAQ-type stock market on Wall Street. If you have experience doing trading, you will see that this world of exchanges Bitcoin is still in its infancy, only some markets offer more advanced types of orders, the rest most only offers orders at market price, and orders at a price Limit set by you (no stop orders, trailing orders, etc.)
It happens that there are dozens of Bitcoin markets in the world, a way to make money with Bitcoins is known as arbitrage. Basically what you do is that you create accounts in multiple exchange of Bitcoin (a tedious process, but worth it if you want to make easy money), and your job is basically, to buy Bitcoins in the market with the lowest price, then you move the Bitcoins To your portfolio in the market with the highest price, you sell to fiat currency, and you withdraw your money, then wait for one of the markets to have a fall. Repeat ad-naseum. There are risks, such as taking too much time to send you fiat money and losing opportunities, or you are simply failing to win because you sold prematurely, or the market closes and you keep your money.
All the currencies currently in circulation, at the present price, add up to give Bitcoin's market value of about $ 12 billion, which is a small number even for an investment banker in the United States.
The Bitcoin investor community has the power of technology to attract more investment in companies that make it easier to use / buy / access bitcoins, which translates into Bitcoin being used by informal economies that move trillions of dollars annually, in To eradicate the payment industry (Western Union, Money Gram, etc.) since now everyone has a bank in their pocket, anyone can receive or send any small or large amount of Bitcoins, without having to ask permission from someone, Wait certain hours, or days of the week to make your transfers.
Bitcoin as an investment is extremely risky, if you want to invest do not put more money than you are not willing to lose, do not invest everything you have in one thing, diversify, but pending your investment bitcoin, if you have the time you can make multiple Hourly transactions and make some money in the short term.