This is curious, have not dug into the details yet.
One thing doesn’t compute right out of the gate, i.e.
“can’t be tracked” yet “contain a chain of ownership”?
Could these give not only fiat currencies but also gold competition?
“Only 21M can be made by the year 2140”
“the algorithm adjusts so that one block can only be made every 10 minutes”
Whoever controls the bitcoin algorithm makes the rules?
Bitcoins are virtual coins in the form of a file that is stored on your device. These coins can be sent to and from users three ways:
1. Direct with peer-to-peer software downloaded at bitcoin.org
2. Via an escrow service like ClearCoin
3. Via a bitcoin currency exchange
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Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.
The benefits of a currency like this:
a ) Your coins can’t be frozen (like a Paypal account can be)
b ) Your coins can’t be tracked
c ) Your coins can’t be taxed
d ) Transaction costs are extremely low (sorry credit card companies)
. . .
Where Do Bitcoins Come from?
Bitcoins are created by a complex algorithm. Only 21M can be made by the year 2140. Your desktop bitcoin software can make bitcoins, but at this point the electricity and time it would take to produce a bitcoin is larger than the actual value of a bitcoin (your laptop might take five years to make one, and they currently trade at $6.70 per bitcoin.
Bitcoin miners use super cheap GPUs (not CPUs) to create the coins, but as more people come online to make them, the algorithm adjusts so that one block can only be made every 10 minutes.