Maybe you have friends or acquaintances who are interested in bitcoin, but still do not hurry with investments, because they do not understand how it all works. Mom my girlfriend is in exactly this situation: on the one hand she understands that before her lies a huge opportunity, and on the other she does not want to invest in something you do not understand. Today I will try to explain it for people, but it will suit those who understand the subject, to be able in simple language to talk about BTC.
The difference between bitcoin and Fiat money is that the first gives you the opportunity to have access to banking services without the involvement of the banks themselves. Let us dwell on three aspects:
- As there are new money?
- As revolve the money?
- Why BTC can cost much more than it is now?
Imagine that we are building a Bank where we were met by the banker. I need to send you money, and for that I have to contact the banker, as he controls the money in the Bank. In the process the banker just makes changes to existing database records on our balance sheets.
In such systems we have equal rights, but the banker can do with the money whatever he pleases. Moreover, bankers can “print” money. And here we are sitting in the Bank, each of us a dollar. The banker exclaims: “We need to stimulate the economy! Let’s print twice as many dollars.” At the same time, it doesn’t add money to our account, leaving all of the new money. It turns out that while we have still a dollar, the banker has $4. As a result, the value of our savings has decreased. If you imagine all the money in the world in the form of cake, then our pieces just decreased, while a piece of a banker has increased. It is unfair, isn’t it?
Many people do not understand the harm of this process, as it is quite slow. Since, as banks were able to inflate the economy through inflation, the dollar has lost over 90% of its value.
Back to our problem: I want to send you money, you want them to, we both want to update our Bank records to make it right. Problem of the modern world is that money is working unfairly. However, we have another way.
We are still in the Bank, and I want to send you 1 BTC. In the old world, I would have to work through the banker, who has all the rights to print and move the money. In the new, I need miners who are responsible for the creation and movement of BTC.
Every 10 minutes the Bitcoin network is a round lottery. Tickets are distributed in proportion to how powerful the computing power you provide to the system. If the strength of your power is 10% of all the computing power of the network, you will get 10% of all tickets. Lottery winners get a basket of bitcoin, initially its size was 50 coins. Approximately every 4 years the size of the basket is reduced by half, and now it is 12.5 BTC. Given the current price of bitcoin, every 10 minutes the network prize pool is $125,000. Why the size of the reward decreases?
Over time, Bitcoin is not required to print more coins. Instead, the network needs to motivate people to move money. The more people became interested in BTC to move of its own funds, the higher the demand for it. In this case, the supply decreases and the price of the coins increases. This allows miners to get more money for moving coins than for their creation.
Miners unite the transactions in the group (now about 3,000 in one) and trying to solve a math problem that will allow them to include a provisioned group in the block. They can assign yourself a reward in BTC. The unique problem consists that it is very difficult to solve, but just to check the result. In the end, to add a new transaction in the chain is not easy, but to verify their authenticity very easily. Thus, the transaction records are almost impossible to manipulate that calls all the members of the network and frees us from the injustice of the banking system. No one can print new money, to spend money they do not have, or take money from another person.
Such conditions fair treatment of the money never existed. Bitcoin provides the validity of the creation and movement of funds.
Message Cedric Dahl — whether your mom to buy BTC? appeared first on crypto.by.