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Tuesday, March 19, 2013

Bitcoin Demystified


Bitcoin is a pseudo currency. It was designed by an anonymous person/group of people to bring in efficiency into the financial transaction. Basic idea is to introduce a revolutionary concept of e-money. Bitcoin is a form of virtual currency that has gained some significant traction in the United States. Bitcoins allow anonymous transactions. There are some organizations which accept payments in the form of bitcoins. There are investors who are ready to buy bitcoins from you. The symbol of bitcoin is BTC. The original paper by the creator of bitcoin is available on http://bitcoin.org/bitcoin.pdf.

Bitcoins can be mined by using software. There is no clear proof that bitcoin mining is profitable. However, the value of bitcoins has climbed steeply in the past few months. As of today, the bitcoin is trading at about USD 55. This is far more than the prediction given by the most authoritative sources. But not many people seem to know exactly what is going on. But I wouldn't advise anyone to naively buy or try to buy bitcoins from anyone unless you have a proper channel. Of course, there is no harm in trying bitcoin mining. But it will involve significant expenditure in terms of computing power. There are specialized devices available which are known to mine bitcoins in a faster way. Hence, I believe that common personal systems may not be suitable for bitcoin mining.

Latest market capitalization of BTC can be viewed on http://blockchain.info/charts/market-cap

Total bitcoins in circulation can be viewed on http://blockchain.info/charts/total-bitcoins

Some additional recommended sources for reading:
http://en.wikipedia.org/wiki/Bitcoin
http://money.cnn.com/2013/03/06/technology/innovation/bitcoin/index.html
http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html
http://www.weusecoins.com/questions.php
http://www.hongkiat.com/blog/bitcoin-questions/
http://bitcoincharts.com/bitcoin/
https://mtgox.com/

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