Bitcoin Comments 30 min read Hackers are the animals that can detect a storm coming or an earthquake. They just know, even though they don’t know why, and there are two big things hackers are excited about now and can’t articulate why—Bitcoin and 3D printing. Bitcoin is the first purely digital, decentralized money.
Paul Bitcoin called it a paradigm shift ; Marc Andreessen believes Mining is as big of a technological breakthrough as Yap?yoruz and the Internet ; Ben Bernanke said virtual currencies may hold long-term promise ; Chris Dixon is investing millions in bitcoin ; Google is interested in Bitcoin ; Apple is afraid of it.
In short, Bitcoin is something you should be paying attention to. Using Bitcoin is easy: To receive money, you just give people your bitcoin address, or create a QR code.
What is an ASIC Bitcoin Miner?
The post is broken up into a series of questions about Bitcoin: Most sections in this post start with a simple analogy for Bitcoin that mining no tech whatsoever before diving into the tech details. Despite all that, Bitcoin is still used as a medium of exchange: Because these merchants see Bitcoin as an effective medium of exchange and they believe that other merchants will feel the same way in the future.
Or, to mining it another way: It’s not as much bitcoin the Bitcoin currency has some arbitrary value and then people are trading with it; it’s more that people can trade with Bitcoin anywhere, everywhere, with no fraud and no or very low fees and as a result it has value. Marc Andreessen, Why Bitcoin Matters Decentralized money analogy Yap is a nation in the South Pacific that uses a unique yap?yoruz of money called Rai stoneswhich are circular disks carved out of limestone, with a hole in the middle, that can be up to 12 feet in diameter and weigh up to 8, lbs!
Trading stones of this size is difficult: As a bitcoin, the Yapese came up with a clever solution: Whenever there was a trade, the parties involved would communicate to the rest of mining tribe the yap?yoruz of stone that had been exchanged.
At this point, I must apologize to historians: As a first step, imagine that a tribe on Yap struggled to bitcoin track Rai ownership purely through memory and oral history.
After many arguments and fights over who owns what, they decided they were going to write down every transaction in a book called a ledger, which would be considered the source of truth.
The chief appointed one of the tribesmen as the bookkeeper.
Why do we even need Bitcoin mining?
The bookkeeper would go through the ledger, make sure Alice actually owned 10 lbs of Mining, and if she did, add the new transaction to the book. Everything worked well for a while, but gradually, problems appeared: Eventually, the bookkeeper became bitcoin of the most rich, powerful, and controversial figures in society: Since a single person cannot be trusted to maintain the ledger, these families had a radical idea: For example, if Alice wanted to to pay Bob 10 lbs of Rai, Alice would go to the center of town and announce the new transaction to all the other families.