What is a good way to concisely explain Bitcoin?
Bitcoin is a new kind of money. It's the first decentralized
electronic currency not controlled by a single organization or government. It's
an open source project, and it is used by more than 100,000 people. All over
the world people are trading hundreds of thousands of dollars worth of bitcoin
every day with no middle man and no credit card companies. It's a startup
currency which has never happened before.
Bitcoin is the first digital currency that is completely
distributed. The network is made up of users like yourself so no bank or
payment processor is required between you and whoever you're trading with. This
decentralization is the basis for Bitcoin's security and freedom.
Email let us send letters for free, anywhere in the world.
Skype lets us make phone and video calls for free, anywhere in the world. Now
there's bitcoin. Bitcoin lets you send money to anyone online, anywhere in the
world for less than a cent per transaction! Bitcoin is a community run system
not controlled by any bank or government. There's no wallstreet banker getting
rich by standing between you and the people you want to send and receive money
from.
Bitcoin is more efficient than all competing currencies.
This will drive its adoption in the same way computers were adopted, in that
computers made people more efficient in competing in the marketplace. A
currency has value by it being widely used. Bitcoin is a startup currency with
a deflationary bootstrapping economy. Its use spreads by providing the
speculator incentive.
Bitcoin is going to be the biggest opportunity for
innovation that the world has seen since the industrial revolution. An idea
whose time has come.
How do you obtain bitcoins?
You can use an online exchange such as the following for US
dollars
CampBX
As well as many others for dollars, and other currencies.
You can also use tools such as bitcoinlocator.com to find
people near you who will trade cash for bitcoins, or advertise that you are
buying bitcoins. Or find anyone in IRC channels or Bitcoin Forum.
Alternatively, you can buy from Bitinstant.com instantly,
but it is more expensive than Mt. Gox or similar exchanges.
However, I believe by far the best way to get bitcoins is to
provide goods and services for bitcoin. This stimulates the bitcoin economy and
makes the bitcoins you receive more valuable.
Mining bitcoins is very technical, and not for many people.
Unless you already have the hardware and technical skill to set it up I would
not recommend mining as a way to get bitcoins.
Most of the heavy lifting for Bitcoin is done by
"miners".
Miners collect the transactions on the network (like
"Alice pays Karim 10 bitcoins" and "Liam pays Sofia 8.3
bitcoins") into large bundles called blocks. These blocks are strung
together into one continuous, authoritative record called the block chain,
which doesn't permit any conflicting transactions. This is necessary because
without it people would be able to sign the same bitcoins over to two different
recipients, like writing cheques for more money than you have in your account.
The block chain lets you know for sure exactly which transactions count and can
be trusted (so no bad cheques!).
So the other main task for miners is to carefully validate
all the transactions that go into their blocks, otherwise they won't get any
reward for their work!
So essentially, the intense work that goes into finding
blocks through hashing secures the network against fraud.
why is it called mining? In the original analogy, people who
performed this essential work were compared to gold miners digging the gold out
of the ground so that everyone could use it. But in reality, Bitcoin
"miners" are just running computer programs on very specialised
hardware that automates the process of securing the network. To sum up, this
software
- Validates them, and doesn't allow conflicting ones
- Puts them into large bundles called blocks
- Computes cryptographic hashes over and over until if finds one "good enough to count"
- Then submits the block to the network, adding it to the block chain and earning a reward in return
How can I accept bitcoins on my website?
There are a number of ways one can go about accepting
Bitcoin on a web interface. Keep in mind as you review these options that
Bitcoin is still a young technology and many of these options aren't what you'd
call "friendly" just yet. That said you do have quite a few options
depending on your level of expertise and technical requirements:
- Use a
service like:
- Use an
existing shopping
cart interface
- There
are existing plugins for Ubercart, Magento and many other popular
e-commerce platforms. If you are looking to modify an existing site that
happens to run on one of these platforms, this may be your best bet. If
you've yet to start a site and don't want to write code yourself this may
still be your best bet since you can choose your platform prior to
implementation.
- Roll
your own using existing libraries
- This
is your best bet if you're using a platform that isn't currently
supported or if you have difficult integration requirements that cannot
be satisfied by existing e-commerce platforms like Magento or Ubercart.
- Languages:
- Roll
your own using the JSON API directly
- This
is only necessary if you are not using one of the half-dozen or so
languages that already have pre-written libraries for interfacing with
bitcoind. The list of languages may be short, but all of the major
industry standards have been covered, so it's unlikely you will have to
go this far.
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