Brief Information About Bitcoin
– Mining is also a way, but for a beginner, the easiest way to fill a bitcoin wallet is to buy bitcoin.
– Where can I buy bitcoin?
– You are asking where or who can buy bitcoins, the answer is simple: someone else who wants to sell bitcoins. The same applies to bitcoin, just like any other economic asset is changing hands. If someone who has bitcoin in his hand wants to convert it to dollars or TL, if someone else wants to give them TL or foreign currency and get bitcoin, they will meet. The first one takes the money, the second one takes the bitcoin and they continue on their way.
– Where does he meet, where does he meet?
– They may have met both sides of a table as we sit here. Of course, the physical encounter is not very practical. There are exchanges for this.
– How so? Is Bitcoin trading on the stock market?
Yes, there are bitcoin exchanges. When it comes to the stock market, don’t think of only the stock markets that are traded. It can be the stock exchange of everything. It has gold, oil, and even a flower exchange. Bitcoin is also bought and sold only in exchanges where bitcoin has changed hands.
– Where are these exchanges? Is it in the USA?
– It exists in every country that has met Bitcoin. Bitstamp, coinbase, bitfinex, okcoin, btc-e are the biggest ones. 3 units operating in Turkey’s Bitcoin exchanges. The first of these btcturk.com was founded in 2013 and is currently the most traded here. Then koinim.com was launched. Apart from bitcoin, litecoin is also sold on this exchange. Finally, takascoin.com was launched.
– What is Litecoin?
– Let me explain how bitcoin came out so I can tell you about Litecoin and other bitcoin counterparts.
– OK. How did Bitcoin come out? Who found Bitcoin?
Who Found Bitcoin?
– The idea of Bitcoin was first introduced in 2009 in a cryptography forum group. The person who wrote in the forum used the name Satoshi Nakamoto. We still do not know the real name and identity of this person.
– Very mysterious..
– Nakamoto published the project he was working on in an article called Bitcoin: A Peer-to-Peer Electronic Cash System. I have translated this article about Satoshi Nakamoto’s bitcoin system as Bitcoin: Peer-to-Peer Electronic Cash Payment System into Turkish. If you search for “bitcoin article” on Google, you can also find and read it in PDF and Play Store in e-book format.
– I’m downloading it right now. What did he say in this article?
– The concept of electronic money has been known for a long time. The money we use today, which is called fi at money in the economy, is transferred electronically between banks or individuals. On the other hand, for example, there are currencies created in some computer games. You can trade with them. The problem here is that someone always checks these currencies.
The central bank prints the money and issues it to the market. Others are private companies. It is impossible for digital money to change hands without being bound by an authority. In this article, Satoshi Nakamoto proves with the scientific method that electronic money can exist without the need for a center. A few months later, he wrote the first bitcoin program, where he put this proof into practice, and shared the source code.
– Is he finally getting rich?
– We don’t know it, but after explaining the mining issue soon, you will be even more surprised to see that Nakamoto has a considerable amount of bitcoin, but he never touched it.
– Yeah, you would tell about bitcoin mining. You always say later, isn’t it yet?
– He’s here now.
– Come on, please. I heard that miners were given 25 bitcoin rewards. I want to be a miner and win.
What is Bitcoin Mining (Bitcoin Mining)?
Let’s start with that the word miner is a metaphor. Money supply is limited in the Bitcoin system. All produced bitcoins will not exceed 21 million units. It looks just like the gold mine on earth is limited and therefore valuable. Since Bitcoin is hard to obtain as gold, they called it “bitcoin miner” to produce “bitcoin mining”.
Bitcoin miner is actually the name given to the device that does this job, not to the person.
– What kind of device is this bitcoin miner? What it looks like?
– What will it look like, looks like a computer. When Bitcoin first came out, even a simple notebook or desktop computer used in our home could be used as a bitcoin miner.
– Isn’t it available now?
No, it is not possible to generate bitcoins with a normal computer at this time.
– Everything is like the correlation between the value of gold and the difficulty of obtaining. In the case of gold, the cost of removing from the soil increases day by day, you need to dig deeper the soil every day. It is not possible to change this side of the equation, so the other side of the equation, its price, also increases depending on the cost. In the example of Bitcoin, the cost of production is variable in the equation. If there is a cost of about 1 lira to produce 1 lira bitcoin before (which no one would produce if it did not cover the cost), the production cost should be increased artificially as the bitcoin value increases.
The Value of Bitcoin
– What is the Bitcoin value based on?
– Nothing. There is neither gold nor dollar, nor any material assets that we consider valuable.
– Then what is the price increasing and decreasing?
– Just by expectations. People assume that they will be valuable in the future and accept to pay in return. Likewise, as the people who think think increase, they gain value?
So isn’t that a fraud? They invest money in something that has no value.
Think about it, why is gold valuable? Or why is a paper with pictures and texts worthwhile for you? In fact, all of them have value since we have agreed on it as a society years ago. We said this “thing” will be valuable, and then we accepted it without question.
– So bitcoin has no value?
– No. All my bitcoin wealth is just one place. But it is important for me that the number is large. Likewise, the size of your number is important to you and its value comes from here. You agree to give me goods and services to grow your own number. We call this number money, that’s all.
– How does the difficulty of producing Bitcoin increase?
– The only way to get new money into the system is the reward given to bitcoin miners. This award is given to the miner in return for a job. There is a need for a mechanism to control that money transfers in the system are made in accordance with the rules. Miners collect these transfer processes and periodically approve and write them in a separate ledger, approximately every 10 minutes. This ledger is called blockchain. Only 1 miner is awarded 25 bitcoins every 10 minutes. (The number 25 also changes in half every 4 years)
– How is only one person awarded? Who is it given to?
– Yes, millions of miners use the processing power to become a partner, but only 1 person hits the lottery every 10 minutes. It’s not a joke, it’s a system that really works like a lottery. But it works so fairly that nobody has an objection.
– What about the others? Is he getting a consolation bonus?
– No consolation bonus. All or nothing. Therefore, a method we apply in real life is applied. Imagine that you bought a ticket for the National Lottery raffle. You have 200 students at school and each of you bought a ticket. But the probability of getting a bonus to a person is very small, isn’t it? Instead of purchasing 200 tickets separately, if you combine your money and buy 200 tickets and keep them in a common pool, the chances of getting bonuses increase 200 times, while the amount of bonuses you win will decrease to one in 200. Here, too, bitcoin miners join forces in mining pools to increase the chances of getting bonuses for them. These pools are so large that sometimes they can make up 50% of the entire system. Pools distribute the prize they won fairly among the participants. There are many distribution methods to be considered fair, now I am not into that topic.
– It was on my mind. I want to be a miner too. How do I get these machines?
Sabret, I haven’t mentioned the difficulty level yet.
– What is the difficulty level?
– Do you like riddles?
– What do I do about it?
– The choice of the miner to be awarded depends on the solution of a puzzle. This puzzle is not like a question of knowledge. The solution to a huge number of jigsaw puzzle that fits a rule that everyone accepts. He gets the first prize to find this number and continues with a new competition. Since this number cannot be predicted, it may take 1 minute to find and 1 hour. The more computing power the system has, the quicker it can be to find the number. Since the system is programmed to distribute 25 bitcoins every 10 minutes, it increases its difficulty when the puzzle is solved very quickly so that it can be solved later and the average is approximately 10 minutes between the two awards. By the way, 10 minutes is not a feature, so he chose 10 minutes as the optimum interval that invented the system.
So does the system get harder every 10 minutes?
– The difficulty level increases or decreases in longer periods because it is calculated with the moving average. Thousands of miners who want to be a part of the award join the system every day. As the total processing power in the system increases, the level of difficulty increases. The cost of producing 1 unit of bitcoin is increasing accordingly.
– Harder, I like harder. Where do we buy these machines?
– As I said, you can do mining, which you can do with your laptop, only with the devices produced for this job. Let me tell you what they did before moving on to where to get it.
– First, let’s talk about the cryptographic hash function. Have you ever heard?
– I didn’t hear it. I think we will see him next year at school.
Crytographic Summary Function
– So be it. You put a large number on the one hand from the summary function, you get a small number on the other. This is the basis. For example, consider the modulus function. The remaining number of a large number divided by a small number. For example, Mod5 (6) = 1, Mod5 (7) = 2, Mod5 (10) = 0 for Mod5. When you know the small number, you cannot guess the big number, but you have an option set. In the cryptographic summary function, it is almost impossible to guess that it is bigger than the small number. If you want to learn more in detail, you can look at http://en.wikipedia.org/wiki/Cryptographic_hash_function.
There are many cryptographic hash functions, one of the best known is the SHA256 cryptographic hash function, which is also used by bitcoin. Another is the Scrypt summary function used by Litecoin and other altcoins.
– What is Altcoin?
– Altcoin means alternative coin. Bitcoin is a completely open source cryptocurrency software and the protocol given to it. In this protocol, it is possible to obtain its derivatives by changing a few parameters while preserving the cryptocurrency logic. First of all, changing the cryptographic hash function comes. Or the amount of reward, approval period, reward half time etc. There are hundreds of altcoins that we can’t even track today, like Litecoin, DogeCoin, NXT, Darkcoin, etc. If you want, you can make a money called ÖmerCoin. In terms of its technical features, it may not differ from bitcoin, but this does not mean that the money you make will be valued like bitcoin.
– Who determines the value of Bitcoin?
– I am determining. It’s a joke, but in a sense it’s true .. Let’s say you wanted to buy 1 bitcoin from me. I asked you for 600TL. Since there is no other seller in our environment, we can say that the price of bitcoin is 600 TL. Now if another seller enters and says I want 550 TL, the price will be 550 TL. But only 0.5 BTC in the man’s hand. Your purchase price will be 575 TL, since you will get half of the price he wants and half the price I want. Also adapt this scenario to the situation where many buyers and sellers come together in the stock market. Bitcoin price is formed at the balance point between buying and selling.
– What is 1 BTC worth in the stock market?
– 610 TL in BTCTürk today
– We were saying the miner device, the subject opened the subject, we could not come yet. When he said there was no cryptographic function.
– It would be in your best interest to learn them. You cannot compare the devices you will get without knowing the summary function. It is not possible to be a miner without knowing which altcoin uses which function, but you will be digging