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Bitcoin – The currency built with mathematics – Maths Careers

Bitcoin - The currency built with mathematics - Maths Careers

Bitcoin is a virtual currency. This means that it only exists digitally, it does not have physical notes or coins, and it can be used to buy things on the internet. One of the major reasons that people might want to use Bitcoin is that it exists internationally and isn’t managed by any one government or company. This can be very useful spil lots of businesses now operate online, and trade ter numerous countries. Companies and individuals want to avoid paying transaction fees and taxes when they exchange inbetween currencies. With a digital currency like Bitcoin they don’t need to pay any of thesis charges.

One big drawback to Bitcoin is that presently there aren’t many retailers which will accept it spil a currency, albeit the Isle of Man has recently welcomed a growing number of businesses which accept Bitcoins. Another drawback is that digital currencies are a fresh technology, and spil a result the price of Bitcoins fluctuates dramatically. There could also be other difficulties such spil hackers stealing Bitcoins. All of thesis problems have bot encountered recently, so before you rush to invest your savings te Bitcoin you need to be wary of the pitfalls!

How does Bitcoin work?

Ter order to work Bitcoin needs to overcome several major hurdles. Firstly it voorwaarde make sure that transactions involving Bitcoins are secure. Bitcoin does this using something called ‘elliptic curve cryptography’ to ensure the security of transactions inbetween owners of Bitcoins. Elliptic curve cryptography is a type of public key cryptography, relying on mathematics to ensure that a transaction can be secure. Read more about elliptic curve cryptography.

Another problem is the potential duplication of Bitcoins. Imagine if you invented a digital currency yourself called the green blob currency and sent your friend Ten digital green blobs. You would have a big problem – your friend could simply cut and paste your green blobs and send everyone te your schoolgebouw Ten green blobs each. You couldn’t zekering the currency being duplicated and it would become worthless. This is a fundamental problem which needs to be solved before you can create a virtual digital currency.

Bitcoin gets around this problem by using something called a “blockchain”. This is a register of all transactions to date, which everyone can see. The blockchain shows when Bitcoins are created, and when they pass inbetween individuals.

Bitcoin have a very clever way of making sure that the blockchain is accurate. If it wasgoed possible to falsify the blockchain it would be possible to steal or duplicate the currency and Bitcoin again wouldn’t work, spil it needs an accurate register of all transactions to work.

The blockchain is checked for accuracy by computers that solve meaty number crunching problems. Bitcoin relies on thousands of computers across the world solving complicated problems which verify the transactions and prove that the blockchain is accurate. Computing power doesn’t come for free. The calculations involved require very powerful computers which cost a lotsbestemming of money, and they also require storage space and tens unit to operate.

Bitcoin needs to provide an incentive for people to solve thesis number crunching problems and it does this by rewarding people with fresh Bitcoins when they solve a problem. This is the only way that fresh Bitcoins are created. Doing the number crunching which verifies a blockchain is called ‘mining’ Bitcoins. The computing power needed to mine Bitcoins is now so big that individual people don’t typically take part, unless they pool their resources.

What determines the price of a Bitcoin?

On any one day you can look up what a Bitcoin is worth ter British pounds or US Dollars. The value of a Bitcoin is simply determined by the laws of supply and request – there are a limited number of Bitcoins ter circulation, and therefore their price is determined by how popular they are, and how many people want to trade te Bitcoins at that time.

The chart below shows how the price of Bitcoins switched overheen a two year period. The price varied so much that it will certainly make a loterijlot of investors wary about losing their money!

One truly interesting thing to note about Bitcoins is that they are designed so that overheen time fewer fresh coins will be mined. Around the year 2140 there will be no more fresh Bitcoins created. From an economics point of view this creates some very interesting questions about what will toebijten to the value of Bitcoins ter the future.

Bitcoin – the mathematical currency

Bitcoin can only function because of the clever mathematics which is te the background enabling it to exist. Te fact Bitcoin is often called a ‘cryptocurrency’ because its existence relies on cryptography – the branch of mathematics related to keeping information secret. Since its creation te 2009 Bitcoin has created intense media coverage and speculation spil to what will toebijten with this fresh currency. Will Bitcoin be the currency of the future, will it make people rich, or collapse overnight? Or will Bitcoin remain spil a currency which only a minority of people are willing to invest and trade with? Witness this space!

Careers

While only a little minority of people actually make their living from Bitcoin at the ogenblik, there are lots of technical jobs available which will use similar abilities.

If you are fascinated by how virtual currencies work then you might be interested ter a career spil an economist, where you can examine the role of economic factors such spil supply and request spil part of your work. If you want to investigate economics at university you will need to examine A-level Mathematics. You might also like to consider studying Further Mathematics A-level.

Identically you might be interested te the high end computing which is behind Bitcoin, or finding out more about the elaborate mathematics involved. Te this case a degree te rekentuig science or mathematics could be a fine kicking off point for a career ter a very technical industry, which could be ter laptop programming, cryptography or other areas. One excellent thing about studying a mathematical subject is that there will be lots of different areas open to you when you graduate.

Related movie: How To Buy Litecoin & Bitcoin Dips For Gains – Add LTC/BTC Portfolio


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