Bitcoin in a Nutshell

Bitcoin has become almost a household name with ever-increasing media coverage, and fair to say its notoriety continues to grow. What’s the fuss about, then? Bitcoin originated as a new form of digital currency around 2009, and was created by a clever chapter named Satoshi Nakamoto from the off as an open source. We ‘re told that his true identity is ‘hidden in mystery’ as he’s some sort of Marvel superhero, I suspect this just means he’s a super nerd, but there’s no question, he’s a pioneer …If you are looking for more tips, visit

So what is the point?

Bitcoin is the same as any other form of currency, but is not under the control of any government or financial institution. The premise is that it is owned and governed by its own people. Bitcoin is de-centralized and managed by peer-to-peer users who all engage in new transaction activity and in what are known as ‘block chains.’ This means a complete ‘copy’ of all transactions is stored locally and used to verify new activity between participants, thereby preventing any individual from malforming, adding or creating fake transactions within the block chain. This approach to ‘consensus’ ensures the protection of Bitcoin transactions.

Bitcoin functions no different from PayPal in that you have a digital wallet with a unique address where people can send Bitcoins to you. You can simply install a wallet on your laptop, or you can download the full Bitcoin wallet and take part as a node in the network.

The value of Bitcoin is more an outcome of supply and demand with reckless investors gambling at the highs. A single Bitcoin (shown as 1.0000000) is currently worth £573, or $935. You can buy Bitcoins at any of the 8 decimal places so 0.0100000 would cost you £5.70 for example, and 0.1000000 would cost you £57.00, no surprise where Bitcoin got its name!

OK, where do I purchase Bitcoins?

You would need to buy Bitcoins in your current currency unless you have any Bitcoins coming your way through a deposit. Purchasing is all about trust because it’s not regulated, but that’s kind of how eBay started, where users trusted each other to pay for and send items, and they did pretty good for themselves …

The Face of Bitcoin energy

Bitcoin mining, as it is known, is the process of generating (and securing) Bitcoins, and a small payment in the form of units of Bitcoins is paid for the time and effort that your hardware is used and your participation level. This is achieved using a variety of methods from using the CPU or GPU of your own PC (not unlike other grid-based BOINC projects like Seti @ Home) to using ASIC miners (Application Specific Integrated Circuits), which are designed for the unique purpose for which they are created, which in this case generates Bitcoins. Unless you have significant investment to buy powerful ASIC miners like those from butterflylabs.com that can run at 600GH / s (Hash’s per second) you’ll have to look at USB ASIC miners like the famous 336MH / s-generating BlockErupter. The BlockErupters allow you to build your own USB hub style rig running lots of them at the same time.