Bitcoin

Bitcoin is a worldwide cryptocurrency and digital payment system called the first decentralized digital currency, as the system works without a central repository or single administrator.

This definition of Bitcoin gives us Wikipedia. In this article we will reveal the concept of Bitcoin, we list the advantages and disadvantages of this system.

Bitcoin began with a concept, a document published on October 31, 2008 by an anonymous author under the nickname Satoshi Nakamoto.

Who is a real developer, one is a person or a group - is still unknown, despite numerous investigative journalism. Since January 3, 2009, the practical implementation of this concept in the program code has begun. At 18:45 GMT (22:45 Moscow time) 03.01.2009 the first block in the network, the so-called genesis-block, was generated. This day is considered the birthday of Bitcoin and is celebrated by the community around the world.

The basis for Bitcoin's work was the technology of blockade. Blocking technology is a technology for the formation, distribution, storage, processing of protected blocks with records of transactions, called transactions. The network of block rooms is peer-to-peer (p2p), which means that there is no centralized server that generates and processes blocks. No institution in the world controls bitcoin. Some of this stalemates, because this means that no bank can control your money.

This moment has both big pluses and huge minuses. Let's list the features that distinguish Bitcoin from other types of money:

• 1.    Decentralization and accessibility. The Bitcoin system is a collection of all client programs (wallets) and a distributed database that is stored on each computer where a complete client is installed, according to the principles of blocking technology. Block is a completely open for viewing database of all operations in the system. You can connect to this database using your own purse or the web interface of special monitoring services from anywhere in the world, without passwords and any other authorization. [5]

• 2.    Full transparency of calculations. Since each block of the system is linked to the previous one, the history of any payment can be tracked to the very moment of coin creation, and it will never be deleted from the database. Knowing only the address Bitcoin, you can at any time learn all the transactions received by this address or sent from it.

• 3.    Lack of control over the network. The system is much less dependent on the human factor, credibility of the issuer or controlling bodies is replaced by algorithms, mathematics and cryptography. Since the block is a distributed database created on the basis of peer-to-peer nodes, the Bitcoin network does not have a monitoring center that can freeze an account, change the number of currency units in the system, block or cancel the payment. The system is much less dependent on the human factor, credibility of the issuer or controlling bodies is replaced by algorithms, mathematics and cryptography. There are small commissions, the amount of which in practice is almost imperceptible and does not depend on the amount of transfer. Transactions in the system are irretrievable as well as transactions with cash. [5]

• 4.    Supranational system. Digital money is considered to be a supranational system, like the Internet. The number of points located around the world and working with crypto currency is rapidly increasing in recent years. This confirms the acceptance of Bitcoin for its product by such large businesses as Microsoft or Dell. When using the crypto currency, you will not clog your head with currency conversion, you will receive large losses in the form of commissions. Also, you do not need to recalculate the value of the object in ordinary currency, to understand its value.

• 5.    The possibility of anonymous calculations. Bitcoin provides a convenient and if desired anonymous means of calculation, the address - the account number in the system - is not associated with its owner, and for its opening no documents are required. It is a string of about 34 characters in length from numbers and letters of the Latin alphabet in different registers. The address        looks,        for        example,        like        this:

• 6.    Award for network support. The new bitcomes come into circulation as a reward for those who perform computational operations that ensure the transfer of transactions. Calculations were called "mining", from the English word "mining" - extraction of minerals. Those who deal with these calculations are called "miners". Their task is to write down in a single block all transactions that occurred on the network since the previous one was released (on average 10 minutes), and "seal" it with a complex cryptographic signature. The next block is calculated based on the signature of the previous one, which guarantees the irrevocability of transactions, and also prevents the entry of "false" banknotes into the system. So the blocks adhere to each other, forming a chain - block. [5]

1BQ9qza7fn9snSCyJQB3ZcN46biBtkt4ee. It can be translated into the form of a QR code or another two-dimensional code for convenience of calculations, and also to transfer as is. [5]

Disadvantages of Bitcoin is also enough, we list the main ones:

• 1.    Large amount of data and their constant growth Today every new user who registered his bitcoin-wallet downloads about 40 GB of information on his computer. And with the increase in the number of users and their transactions, this number will only increase.

• 3.    The Dark Market

Given this drawback, at the moment it is not possible to keep the entire transaction database on a personal hard drive. In this regard, the installation of an "easy" client, checking only fresh operations, and everything else is entrusted to "full" customers. [3]

The above described advantages led to the use of the technology of blocking, and specifically the money system bitcoin, on the Dark Market. This presented bitcoins in a negative light, which set even more people against this system. [7]

For the first time, the use of bitcoins to carry out illegal payments began on the site called "Silk Road" (Silk Road). The owner of the site was a character from the novel by William Goldman's "Princess Bride" - a terrible pirate Roberts. The person behind this person is Ross William Ulbricht. Ross William managed to bring together three modern technologies: the Internet trading platform, TOP (The Onion Router, TOR) b, Bitcoins. [7]

We have only a small part of the newly created monetary system, experts are optimistic about the prospects for an independent, fast and cheap payment system and every year such experts become more and more.

Used sources

• 1.    Bitcoin [electronic resource]. - Access mode: https://bitcoin.org/en/how-it-works - How does Bitkoyn work ? - (Date of circulation: 19.12.2016)

• 2.    Coinspot      [electronic      resource].      -      Access      mode:

• 3.    MoneyMarkerGroup [electronic resource]. - Access mode: http://mmgp.ru/showthread.php?t=461846 - Differences between crypto currency and fiat money, advantages and disadvantages, prospects - (Date of circulation: 19.12.2016)

• 4.    Wikipedia      [electronic      resource].      -      Access      mode:

• 5.    Bitcoin Security [electronic resource]. - Access mode: https://bits.media/chto-takoe-bitcoin/ - What is Bitcoin and crypto currency? - (Date of circulation: 19.12.2016)

• 6.    IKS-media      [electronic      resource].      -      Access      mode:

• 7.    Lenta.ru      [electronic      resource].       -      Access      mode:

- What is Bitcoin - (Date of circulation: 19.12.2016)

- Bitcoin - (Date of circulation: 19.12.2016)

- Blocking and cloud technologies. - (Date of circulation: 19.12.2016)

- Silk Road Mirage - (Date of circulation: 19.12.2016)

"Экономика и социум" №10(41) 2017