Everything you need to know about Bitcoin

21 Cards

CURATED BY Timothy B. Lee

2014-08-17 23:23:05 -0400

  1. What is Bitcoin?
  2. Can you explain bitcoin in a 2-minute video?
  3. Why are geeks excited about a new payment network?
  4. What will people be able to do with Bitcoin that they can’t do with conventional financial systems?
  5. Who created Bitcoin?
  6. Who is in charge of Bitcoin?
  7. How does the Bitcoin network process transactions?
  8. Why does the Bitcoin network use such a crazy scheme to process transactions?
  9. What incentive do people have to help process Bitcoin transactions?
  10. What is a 51 percent attack and why is it a threat to Bitcoin's future?
  11. How do people get bitcoins?
  12. People have made a lot of money investing in bitcoins. Should I buy some?
  13. Is volatility going to be a fatal problem for Bitcoin?
  14. Isn’t Bitcoin just a currency for criminals?
  15. What can I buy with bitcoins?
  16. What’s up with Bitcoin competitors such as Litecoin and Dogecoin?
  17. Isn’t Bitcoin’s fixed money supply going to create deflationary problems?
  18. Is using Bitcoin a good way to fight inflation?
  19. Does Bitcoin have a security problem?
  20. You didn't answer my question!
  21. Where can I read more about Bitcoin?
  1. Card 1 of 21

    What is Bitcoin?

  2. Card 2 of 21

    Can you explain bitcoin in a 2-minute video?

  3. Card 3 of 21

    Why are geeks excited about a new payment network?

  4. Card 4 of 21

    What will people be able to do with Bitcoin that they can’t do with conventional financial systems?

  5. Card 5 of 21

    Who created Bitcoin?

  6. Card 6 of 21

    Who is in charge of Bitcoin?

  7. Card 7 of 21

    How does the Bitcoin network process transactions?

  8. Card 8 of 21

    Why does the Bitcoin network use such a crazy scheme to process transactions?

  9. Card 9 of 21

    What incentive do people have to help process Bitcoin transactions?

  10. Card 10 of 21

    What is a 51 percent attack and why is it a threat to Bitcoin's future?

    Bitcoin's decentralized system for processing transactions, known as mining, operates by consensus. A new block become official when a majority of the network accepts it and adds it to their own copy of the blockchain. But whereas conventional democracies operate according to a principle of one person one vote, influence in the Bitcoin network is based on computing power.

    So long as computing power is decentralized, no one can tamper with the blockchain. If someone tries to alter a block that has already been accepted by the network, that person's change will be "shouted down" by the majority of miners who have already accepted the block as an official part of the blockchain.

    But that could change if someone gained control of a majority of the network's computing power. This is known in the Bitcoin community as a 51 percent attack. And that has become an increasingly serious concern in recent months. Miners have organized themselves into pools that work together and share the proceeds of their efforts. And in June 2014, a mining pool called GHash gained slightly more than 50 percent of the network's computing power.

    In principle, an group with a majority of the Bitcoin network's computing power can do two things that the system isn't supposed to allow. First, by refusing to approve anyone else's blocks, it can claim 100 percent of the rewards from mining — which amounts to millions of dollars per week — for itself. Second, it could reverse past transactions by rejecting blocks it had previously accepted. That would allow a "double spending attack," where members of the GHash pool could spend Bitcoins and then take them back later.

    Will GHash do something like that? The organization says it won't, and there's a good reason not to: doing so could seriously damage Bitcoin's market value. Remember, GHash is earning thousands of Bitcoins a week. Anything that shakes public confidence in Bitcoin could reduce GHash's long-term profits a lot more than it could gain in the short run.

    Still, Bitcoin insiders say that the concentration of Bitcoin mining is a threat to the currency's long-term credibility and success. In a June 13 blog post, Bitcoin lead developer Gavin Andresen urged members of the GHash pool to quit the pool and join one of its smaller rivals to help restore some competitive balance to the Bitcoin ecosystem.

  11. Card 11 of 21

    How do people get bitcoins?

  12. Card 12 of 21

    People have made a lot of money investing in bitcoins. Should I buy some?

  13. Card 13 of 21

    Is volatility going to be a fatal problem for Bitcoin?

  14. Card 14 of 21

    Isn’t Bitcoin just a currency for criminals?

  15. Card 15 of 21

    What can I buy with bitcoins?

  16. Card 16 of 21

    What’s up with Bitcoin competitors such as Litecoin and Dogecoin?

  17. Card 17 of 21

    Isn’t Bitcoin’s fixed money supply going to create deflationary problems?

  18. Card 18 of 21

    Is using Bitcoin a good way to fight inflation?

  19. Card 19 of 21

    Does Bitcoin have a security problem?

  20. Card 20 of 21

    You didn't answer my question!

  21. Card 21 of 21

    Where can I read more about Bitcoin?

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