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AND THE POINT IS... Why would someone start a new currency? For thousands of reasons, but for one, Bitcoin rolled out as response to the government bailout of big banks in 2008. Watching tax dollars get transferred over to large, private organizations that still doled out enormous bonus checks to talent certainly ruffled feathers. It made sense, especially in the wake of financial crisis, to have a currency less attached to politics. “It’s just perfect timing

for Bitcoin,” Williams explains. “Bitcoin was born in the wake of the bailouts — out of frustration for the way the dollar is being managed” The snowball effect of this sentiment has helped Bitcoin’s value jump from around $13 per BTC to about $900 per BTC in just one year. People speculate who the mastermind who launched Bitcoin might be, but no one knows for sure. A programmer going by alias Satoshi

Nakamoto published the first description and requirements for bitcoin in 2009, and it started as a hobby or pet-project for the coding underground. But in the scheme of this movement, it doesn’t matter who started it, but rather, who is continuing it. “What’s really cool about Bitcoin is that things are governed by a consensus,” Williams explains. “You have cryptography and open source. There is no central authority.”

etc. then guess what? I’ll give you 25 cookies for all of your hard work. Anyone could mine bitcoin. Could being the operative word — as not to reduce the process of mining to something simple. Years ago, an amateur techie could learn the basics necessary to run software that searched out unclaimed coins and key into the Bitcoin software. But the Bitcoin code self-adjusts its complexity based on usage and pretty much all of the easy bitcoins are taken. Now you need complex systems and a ton of computer power (i.e. multiple computers) to get your hands, err, digital wallet on them. In terms of time, electricity and technology, it’s expensive to be a modern miner. And the aforementioned self-adjustment of the code’s growth rate automatically counteracts inflation so miners don’t unleash too many coins on the market at one time. Essentially, the code determines how many blocks have been solved (aka bitcoins are created) or “mined” within a predefined window of time — say, one month. So if one million bitcoins are somehow mined relatively fast in that month, the code will “self adjust” and become more difficult so that it’s harder to “solve the blocks.” But the process has certainly made overnight millionaires — those who acquired bitcoin early on have reaped the benefits, if they were smart. I read an online thread where some regret-

ful consumer still has an unspent $10 Starbucks gift card that he paid 50 BTC for back when it was trading for $0.25 per BTC (worth over $30,000 today). But on the flip side, Theguardian.com reported a man purchased $27 worth of bitcoin in 2009 only to find out it’s worth some $886,000 today. But none of this mining process really matters to the layman bitcoin investor. Basically, when you purchase bitcoin, you are buying the coins from miners, or from others who purchased their coins from miners.

MINING THE GOLD Since there is no country minting these coins, bitcoins are “made” or enter the market through a process called “mining.” Which is misleading since there is clearly no mine, no mineral or anything tangible for that matter. Mining is an action that takes place when computers run a program to participate in the Bitcoin network by solving computationally difficult problems. You see, Bitcoin has securities in place, and if your computer runs programs that are able to compute the correct solution (which is just letters and numbers in a series) that matches up with the Bitcoin network, you “unlock” more coins into the market. When the solution is found the computer transmits the “proof of work” to the Bitcoin network which proves that the “Block” has been solved. Whoever does this first is rewarded with newly created bitcoins. As each block is solved, one after the other, they form a chain called simply the “blockchain.” For every blockchain completed, that person or miner gets 25 bitcoins and there is a new problem to solve every 10 minutes. The system of mining (when miners build a blockchain), in a way, is helping Bitcoin get stronger. People running the programs that aid in network security is kind of like having a helper in the kitchen. Think about it as our cookies. If you get the right measure out of flower, water, butter,

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SOME REGRETFUL CONSUMER STILL HAS AN UNSPENT $ 1 0 S TA R B U C K S G I F T C A R D T H AT H E PA I D 5 0 B TC F O R B AC K W H E N I T WA S T R A D ING FOR $0.25 PER B TC ( WO R T H OV E R $ 3 0 , 0 0 0 TO DAY )

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