Today we are going to talk about the cryptocurrencies that you’ve been hearing so much about. There are a ton of them floating around now and everyone wants a piece of the pie but the main ones are Bitcoin, Litecoin, Peercoin, Namecoin and Dogecoin and Catcoin. Actually no, I’m just kidding about those last two. They do really exist. In fact people are making money on Catcoin at the moment. But anyway those four first ones are sort of the more relevant ones.
We’re going to give you a rundown about this cryptocurrency thing and what it’s all about. So at the most basic level these cryptocurrencies are really no different than the money that you have in your wallet. Similar to this money in my wallet it has no intrinsic value it’s just bits of data. This is just pieces of paper you can’t actually really do much with this other than like throw it in the air like a rap star. Like you know, make straight menacing poses and hold large wads of it or whatever else you want to do.
It also bears some similarities to commodities like gold and diamonds though so there’s no central bank that controls it. And keeping with that theme of no control, like gold and diamonds, it can be sent directly from user to user without any credit card companies banks or other intermediaries.
Now unlike the rap status paper you can’t just print a bunch of the cryptocurrency. They they need to be mined so at the heart of Bitcoin, for example, there is a mathematical problem. Users solve these problems with high end computer parts. Graphics cards are better than C.P.U.s use and beyond those are ASICS cards. And every time a solution to the problem is found there is a reward given in the form of a Bitcoin. Now the difficulty of this math problem varies with the strength of the network so that the solutions are found at regular intervals every ten minutes on average.
The reward itself also varies except it is tied to a four year scale which started at ten point five million coins in the first year and then will half. Now eventually we’re going to reach the upper limit of twenty one million bitcoins and after that, like gold, once we run out of it we can’t mine more. And the theory is that Bitcoins will become more expensive as they become more rare and people eventually lose them. I mean once you lose a wallet full of bitcoins those Bitcoins are gone forever.
Don’t worry guys there is a saving grace. Unlike normal currency that can only make smaller denominations like pennies and dollars Bitcoins can actually be divided up to eight decimal places. A zero point zero zero zero zero zero zero zero one Bitcoin would be the smallest denomination of that coin. That’s how even with Bitcoin hovering at you know anywhere between five hundred fifty nine hundred dollars Canadian depending on the time of day and you know what’s going on out there in the market, you can still just use a fraction of that to pay for a pack of gum for example. IT’s not like do you have change for seven hundred dollars?
Now the way that Bitcoins are stored is in a virtual wallet which basically keeps a unique record of every single transaction and also allows you to send and receive Bitcoins. All transactions are also verified by the miners and that record is permanently stored by all members of the network. So that means that transactions can take a few minutes in order to complete and verify that it is actually gone through.
So that is the general idea behind Bitcoin and cryptocurrency as a whole but what about all these other cryptocurrencies. We’ve mostly talked about Bitcoin so far. Well there are three main ones Litecoin, Peercoin and Namecoin.
Litecoins are the second biggest cryptocurrency right now with. The main advantage I guess being that there are a lot cheaper, they’re easier to mine and they are also about four times faster when completing a transaction. Speaking of them being easier to mine, Litecoin is also ASIC resistant. Which means that ASIC cards and machines that are special pieces of hardware that are built simply to mine cryptocurrency faster is not that effective on it.
Now speaking of ASICs, let’s talk a little bit about what those are. So for Bitcoin particularly because it’s not ASIC resistant. ASIC cards and machines are special pieces of hardware that are built simply to mine Bitcoin way faster than even the highest end consumer grade hardware. To put that it in perspective, the fastest video card produces between one to two kilohash, which is the unit of measurement for how quickly you can calculate cryptocurrency. So these dedicated cards compared to 1.2 kilohash can produce up to fifteen hundred gigahash at power consumptions that are much lower.
Power consumption is one of the major costs of mining bitcoins because you have to have the hardware working extremely hard. Essentially with Litecoins, when I say ASIC resistant, it means that they are much harder to make dedicated hardware for and G.P.U.s, graphics cards remain the most efficient way to mine them. That makes them much more accessible than the two thousand plus dollars ASIC monster dedicated hardware and in addition to that you can actually use your graphics card for other things. So it’s more for real people, normal people.
Now all the other currencies have their unique spin but I won’t bog you down too much with all of that. Just check out the description to learn more about them.
In summary Bitcoins are a virtual currency which, like I said, is not really that different from a paper currency, this is a sort of virtual value as well. You can mine them with high end computer parts or ASIC miners. There are a maximum of twenty one million bit coins out there twelve million of which have already been found and all the transactions are publicly and anonymously stored.