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What is bitcoin ? The basics of the digital currency

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Following the multiplication of binary option brokers providing contract on bitcoin, we figured it could be interesting to present you the basics of this new digital currency. The bitcoin popularity is growing among retail traders who find in this digital currency an alternative to traditional financial markets. Marc Andreessen, for example, from the venture capital firm Andreessen Horowitz, wrote in The New York Times on January 21 this year: “Far from a mere libertarian fairytale or a simple Silicon Valley exercise in hype, Bitcoin offers a sweeping vista of opportunity to re-imagine how the financial system can and should work in the internet era, and a catalyst to reshape that system in ways that are more powerful for individuals and businesses alike.”

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What is bitcoin?

Bitcoin is the first digital currency that can be transferred instantly, anonymously and securely, with no transaction fees, between any two people anywhere in the world. You can think of it as electronic cash that you can use to pay for goods or services online without having a bank as intermediary. Bitcoin is a “crypto currency”, in other words, as defined by Investopedia, a digital or virtual currency that uses very complex cryptography for security and is thus difficult to counterfeit. This currency is generated by complex algorithms linked to online peer-to-peer systems.

How are bitcoins generated?

Bitcoin is the first currency that would be controlled by cryptography, rather than a central bank. A bitcoin is a piece of code that fits a specific mathematical formula. It’s so complex that finding a code that fits the formula, requires incredibly powerful computer processors spending huge amounts of time trying different combinations. This is what’s known as ‘mining’ and is how new bitcoins are created. Also, there will only ever be 21 million bitcoins in existence due to the way the formula was worked out at the very beginning.

So when a computer solves the complex formula, a bitcoin block is generated with 50 Bitcoins as reward, but as almost no one mines alone, they are split between all the miners in the mining pool. Right now, a block is generated every 10 minutes but given that more and more processing power gets into the mining every day, the underlying algorithm that generates the new formula, adds more complexity to it along the way in order to keep the bitcoin supply regular.

How to buy bitcoins?

Most investors that speculate on bitcoin don’t “mine” them but buy them directly on a bitcoin exchange, the largest international exchange is BitStamp (https://bitstamp.net). You can also buy financial instruments that will track the performance of the bitcoin such as a CFD (contract for difference) or whose value will be dependent on the direction of the bitcoin price evolution such as binary option. You can of course buy these instruments through a regulated broker that is acting as a Market-Maker for the product.

Is bitcoin a safe and secure currency?

Bitcoins are based on complex cryptography, harder than the ones used by banks and military to send data or virtual money from one place to and other. Bitcoin is thus considered extremely safe. Nevertheless, the exchanges and brokers who provide bitcoin are not protected against any bankruptcy threats so you should select your counterparty with care.

Bitcoin binary options with AnyOption

AnyOption is one of the only brokers to propose binary options on bitcoin. Bitcoins are listed in US dollars (like any forex pair) on multiple exchanges and AnyOption designed a specific platform to monitor all the most popular exchanges in order to perfectly track the bitcoin live price.

Visit AnyOption

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