what is bitcoin?

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Video Version: http://www.youtube.com/watch?v=X_hz7TyQ_bs Articles: http://dailyreckoning.com/bitcoins-moment/ http://dailyreckoning.com/what-bitcoin-is-teaching-us/ http://dailyreckoning.com/bitcoin-for-beginners/ Are we at the threshold of a new currency era? Bitcoin has exploded in popularity in recent months, leaving analysts conflicted as to its value. Is it real money? Should it be regulated? Will it threaten the dollar? Bitcoin's value has increased remarkably in the wake of the events in Cyprus. In a world where governments have indicated their willingness to seize euro-denominated assets, many are looking to alternative stores of value that government can't touch. But what exactly is a Bitcoin? In this Daily Reckoning video, we give you a brief tutorial about the red-hot digital currency and tell you why some are heralding it as the future of currency, free from central bank manipulation, inflation and government capital controls. To get more insights into the latest trends in economics and finance, subscribe for free to the Daily Reckoning.

TRANSCRIPT

The U.S. has the dollar… Japan has the Yen… The U.K. has the pound…

The Internet has the Bitcoin.

Bitcoin is digital money used directly between people anywhere in the world to buy online goods and services.

To get started, download the Bitcoin wallet. Like a real wallet, it stores your bitcoins…

And is used to send and receive payments using unique addresses.

Anytime a transaction is made between Bitcoin users, it’s recorded on a publicly shared log called the blockchain.

These transactions are checked and confirmed by miners. Miners are essentially people with powerful computers who, in exchange for newly

created bitcoins, use Bitcoin software to verify that transactions are correct.

With thousands of miners contributing, transactions run smoothly and the network is constantly secured.

Cryptography is used to make it impossible for anyone to spend funds from another user's wallet and can encrypt a wallet so that it cannot be accessed without a password.

This type of security is also used for credit card transactions and electronic bank transfers.

Hacking the Bitcoin network would require processing power 15x greater than the world’s fastest supercomputer.

There is no company or central bank controlling Bitcoin, so it cannot be inflated like the dollar.

In fact, the embedded code has been preset so that only 21 million bitcoins will ever be in circulation.

Right now, 25 bitcoins are generated every 10 minutes. This rate will halve every 4 years until the final bitcoins are created in 2140.

And no central bank can add trillions more to the system for their own advantage and destroy its value.

Several exchanges exist online where you can buy bitcoins and cash out your bitcoins for major currencies.

There are currently 50,000 Bitcoin transactions per day, over 1,000 online stores accept them as payment, and the Bitcoin market has exploded from $50 million to $1.2 billion in only a year. And these numbers are growing.