Alright, everyone has at least heard of Bitcoin but I know that there are a lot of folks out there that don’t have the slightest idea what Bitcoin actually is, what blockchains have to do with it or cryptocurrencies in general. So I wanted to give a brief glimpse at the history of Bitcoin and other cryptocurrencies, how they work, how you can use them, and what they’re worth today.
The Who & What
In early 2009, an infamously mysterious character or entity known only as Satoshi Nakamoto implemented the first blockchain database, called the ‘Genesis Block’ and Bitcoin was officially launched. Up until then, the digital currency market was plagued with issues that inadvertently allowed consumers to ‘double spend,’ using the same credit or currency to purchase multiple goods or services. By using blockchain technology, Bitcoin was able to solve this issue once and for all.
So what is a blockchain? It’s really simple to understand if you just think of it down to the basics. Each ‘block’ is basically the user computers on the network and are a constantly updated set of data records or transactions that are interlinked, encoded, and secured with cryptography. A small number of these records are packed into individual blocks that are linked in a ‘chain’ where each block includes the encrypted data of the block preceding it in the link, aka blockchain. This ensures and confirms the integrity of each block all the way through the chain to the originating, or ‘parent,’ block. This means that every single transaction is available to everyone in real-time, solving the double spending issue and making fraud next to impossible.
Expanding on the blockchain technology, Ethereum introduced ‘smart contracts’ which are similar to traditional contracts in that they define the parameters, rules, variables, and any penalties of an agreement. However, the smart contracts have modernize these agreements and automatically enforce all the obligations of the contract and cannot be modified. The contracts are securely stored via blockchain technology which gives them the ability to offer viable solutions for a wide array of industries. Smart contracts could be utilized to automate and simplify transactions that are normally completed by lawyers, banks, and other financial institutions that generally charge excessive rates.
Generally speaking, blocking and blockchains are revolutionizing the industry by speeding up the handling of the data and minimizing the overall storage needed for the data. Various other companies and cryptocurrencies are working to expand on the blockchain technology and the non-profit Enterprise Ethereum Alliance (EEA) has over 150 Fortune 500 companies, academics, start ups, and technology vendors working with Ethereum experts to expand upon both the blockchain and smart contract technologies. It is definitely going to be interesting to see what the future holds for these companies and technology.
Down in the Mine Shaft
Okay, to make it simple – ‘mining’ is simply using your computer’s processing power to solve algorithms. There are two types of mining: the old way – okay okay! the new old way and not the old old way using hardhats and pickaxes – that uses your computer’s central processing unit (CPU) and has fallen out of favor overall due to positive results taking so long to achieve, and then GPU mining which uses your graphic card’s memory instead of the CPU. GPU mining utilizes less electricity and computing power and time, making it inherently faster.
If you’re serious about getting started mining then I highly suggest doing some research as it can spike your electric bill, not to mention slow your computer down to a crawl if it is ill-equipped to handle the processing requirements. There are plenty of books and websites that go into each of the available cryptocurrencies, where they come from and what they do, and what you’ll need to do to get started. Most require a virtual ‘wallet’ but please just remember, this is actual currency and you need to treat it as such. Use only trusted sites and companies and always utilize ‘strong’ password practices on every aspect, including your associated email accounts.
What’s Going on in 2018?
While we can never be certain as to how any one company or technology is going to fare on the stock market, the past few months have been extremely volatile for the cryptocurrency market. At the first of the year, Bitcoin was worth over $10,000 a share while Ethereum was closing in fast on $1,000 but as of this writing they are worth $6700 and $376 respectively.
The threat of a trade war between the US and China has the market in turmoil and China recently shut down Bitcoin operations in their country. On Wednesday, China unveiled new tariffs on 106 US products and cryptocurrencies such as Ethereum and Bitcoin are decentralized, making them not backed by any government and therefore already an extremely volatile asset. Bitcoin’s value dropped 48% in the first quarter of this year but many in the industry expected this market to drop and level off as investors review their portfolios and even out the percentage of cryptocurrencies that they own.
It’s definitely going to be interesting to see how the current administration, the possible trade war, and the inherent fluctuation of the industry play out over the next few months. There are virtually tons of startups and cryptocurrencies available and I don’t think we’re going to see them go away anytime soon. Bitcoin is accepted at many different locations for many different types of services and goods, and several other crypto’s are eagerly trying to follow in their footsteps.