Patrick Manasse

UnderstandingBitcoin

The Currency of the Future

A commonquestion many people

have is"What is Bitcoin?”

Bitcoin is a peer-to-peer digital currency thattrades on public exchanges anywhere in theworld between two people at the speed of

email.

This is a very goodquestion.

In regular financial transactions. Money goes to themiddleman - banks, businesses, currency exchanges, etc.

One big advantage of Bitcoin is that theseglobal transactions are processed at a farlower cost than what is typically processedthrough the traditional financial system.

This is called "double spending."

Bitcoin cuts out double spending.

But how does it work?

Bitcoin is comprised of adistributed network of

computers that is reliant onthe Bitcoin protocol.

Bitcoin Protocol

Confirms or validates everytransaction made with a unit of

account called a "bitcoin"

A BitcoinCan be broken down into fractions

Making previously impossible micro-transactions

Possible.

Bitcoin makesthis possible

with"blockchain"

Blockchain is essentially agiant globally sharedledger of every bitcointransaction in history...

Ever.

The blockchain expands asthe exchange is

automatically lumpedtogether with other new

transactions...

Resulting in anew "block."

This system does require amassive amount of

computer power to verify,confirm, and record all thetransactions, but it is aself-funding system.

Hold on to your hats.

This is where it gets kindof crazy.

Bitcoins themselves arecreated through a "mining”""

process.

This process is the samemathematical process that seals

blocks of new transactions onto theblockchain by verifying that everyexchange is valid and using real

bitcoins.

The miners are rewarded with newbitcoins for devoting their time and

computing power.

The idea is for the network toreward those who are keeping thenetwork running in a completely

decentralized manner.

THE BOTTOM LINE

More than just a neat computerexperiment, bitcoin is starting to

become a popular and viable formof currency.

More and more companies arebeginning to accept bitcoin.

In fact:

The top 8 companies who areaccepting bitcoin have had annual

revenues totaling more than$85 BILLION.

Recently,

Credit card companies have releasedcards that operate solely on bitcoins.

And the popularity of bitcoin keepson growing

So basically,

Bitcoin is

Kind of a bigdeal.