All about Bitcoin

What is Bitcoin?

Bitcoin (BTC) is a digital cryptocurrency. For the first time Bitcoin has been spoken about in 2011, but still there are no exact details of who invented cryptocurrency. It is believed that it was Staoshi Nakomoto, but who is it, and whether it real person or someone is hiding under the pseudonym is still unknown. The main advantage of Bitcoins is that unlike traditional currencies such as the dollar, euro and pound sterling, BTC has no central bank, no single center-issuer and virtually all transactions are anonymous.

Bitcoin network appeared for the first time in 2009, and since then there was a rapid rise around the world. As of 2016, tens of thousands of businesses worldwide accept Bitcoin, including some of the largest world online stores. A number of national banks of foreign countries admitted Bitcoin as an equivalent currency.

Bitcoin is a peering payment system that uses the unit and data transfer protocol of the same name. To ensure the functioning of protection system cryptographic methods are used. All information about transactions between system addresses is unencrypted.

Ongoing transaction are irreversible, electronic payment between two parties goes without intermediaries. But there is an opportunity to attract a third party - guarantor using multi-signs. No one can freeze funds with the exception of the owner, including the freeze for some time.

Bitcoins can be used in exchange for goods or services from sellers who are willing to accept them. An exchange into ordinary currency is made through online digital currency exchanger, other payment systems or exchangers.

Commission for conducting of operations is appointed by the sender voluntarily, the amount of commission affects the priority for processing the transaction. The client program usually prompts the recommended size of the commission. Transactions without commission are also possible and processed, but not recommended, since the time of their processing is unknown and may be significant.

One of the main features of the system is full decentralization: there is no central administrator or any its analogue. A necessary and sufficient element of this payment system is the core client program. Client programs running on multiple computers are connected to each other in a peer network, each node of which is self-sufficient and has equal rights. The state or private management of the system is impossible, as well as changing the total amount of bitcoins. The amount and time of release new bitcoins are known in advance. But they are distributed among those who uses their equipment for calculating.

The history of bitcoins

In 2008, a person or group of people under the pseudonym Satoshi Nakamoto published the file with the description of the protocol and the principle of payment system operation in the form of a peer network. According to Satoshi, the development started in 2007. In 2009, he finished the development of a protocol and published the code of a program-client. Network "Bitcoin" has already been launched. According to media reports, Satoshi Nakamoto - alias of Australian entrepreneur and expert in encryption of Craig Stephen Wright, although this is just one of the many versions.

Further development is organized and coordinated by the development community, and any significant changes in the protocol should be adopted by majority of owners of mining pools.

The first exchange of bitcoins in real product took place in May 2010 - American Laszlo Hanech got two pizzas for 10,000 bitcoins

Principle of working

Bitcoins exist only in the form of notification in a distributed base (they are the same - Blockchain), which in a public open (unencrypted) form contains all the transactions indicating the bitcoin addresses of senders/receivers but without any information about the real owners of these addresses. There are no separate notifications on the current amount of bitcoins of any owner. Only on the basis of the chain of transactions it becomes clear the current number of bitcoins associated with one or another bitcoin address.

That is, you can see that the address received 1 bitcoin, and in another transaction for the same address it received 2 bitcoins, the third transaction sent from this address 1 bitcoin. But the basis doesn't contain separate notifications, how many bitcoins are behind this address - there is just an opportunity to calculate it at any time. Such calculations make client programs automatically, the user may not even notice the fragmentation of information.

Mining

The release of new bitcoins is decentralized, it does not depend on any regulatory body, the issue volume is known. A standard portion of new bitcoins is added to the amount of commissions from transactions included to the next block. One who added the next block in the transaction database receives the final amount as a reward.

The activities on the creation of new units for the opportunity to receive compensation in the form of bitcoins issued and fees was named "Mining".

Since 2013, there having been reports of "factories of bitcoins" - specialized unmanned factories, where thousands of ASIC-processors "are working". The monthly income of the factory could exceed a million dollars (thousands of bitcoins).

After the formation of every 210,000 blocks (approximately once every 4 years) it was programmed to reduce remuneration of new bitcoins by half, that is, this value is a decreasing geometric progression (amount of remuneration is 50 → 25 → 12.5 → ...). The total amount of bitcoin emission is limited being the sum of decreasing geometric progression components and would not exceed 21 million. On May 2014 there was 12.7 million bitcoins in turnover.

The original size of emission while creating the block was 50 bitcoins. On November 28, 2012 there was the first reduction of emission award from 50 to 25 bitcoin. The next halving would happen around the end of July 2016. In 2031 the size of emission while creating a block would be less than one bitcoin and continue to approach zero. The emission is expected to stop in 2140, as a renumeration for the unit can not exceed 10-8 BTC, but long before fees would become the main source of rewards for the formation of new units.

Legal status

The attitude to "Bitcoin" system varies greatly in different countries. Number of countries have officially permitted transactions with Bitcoin. Usually, they are considered as a commodity or investment asset, and for tax purposes they are the subject to the relevant legislation. Sometimes bitcoins are considered as a unit of account, in other countries, such as Japan, Bitcoin is a legal means of payment  with a tax on its purchase. In other countries (for example, in China) transactions with bitcoins are prohibited for banks, but allowed for individuals.

In many countries the status has not been defined or changed yet. Initially, the Bank of Thailand said that for Bitcoin transactions a license to conduct foreign exchange transactions is required. Later, an explanation has been reported that due to lack of legal grounds, bitcoin exchange doesn't fall under the currency legislation of Thailand, as foreign currency isn't  involved in the operations. After some time, the Bank of Thailand explained additionally that bitcoins can be exchanged for foreign currency, they still associated through exchange and the license is needed.

In the US, bitcoins are considered as a "virtual currency".

Platforms for exchange (How to buy / How to sell Bitcoins)

     Buying or selling of bitcoins can be made through the operation directly with the person or through specialized ATMs. But the digital currency exchange services (including bitcoins) for other assets, including the national currencies are more popular. Such services usually make all the operations only in electronic form. As a rule, commission for operation is charged.

     Such platforms are often named as "exchanges", although they don't have the official exchange licenses. Scandals around burglary of exchange platforms have shown the potential technical and legal insecurity of their customers when stealing cryptocurrency.

 Mt.Gox is the first of the major platforms of buying/selling of cryptocurrency. It's located in Japan. At the end of February 2014 trading was stopped ​​because of the theft of a large sum of bitcoins in Mt.Gox.

·     Bitstamp is one of the oldest platforms for the exchange bitcoins registered in Europe (Luxembourg), it is one of the five largest platforms in the world. Bitstamp supports only one trading pair - BTC/USD. In October 2015 the daily turnover was 15,300   bitcoins.

       Cryptsy is one of the most significant platforms for the exchange bitcoins among those who in addition to bitcoins trade other cryptocurrency. The site was registered in May 2013 in the US. In November 2015 its daily turnover was about 400 bitcoins. Verification of account is obligatory only for operation with US dollars. In January trading was suspended because of the possible bankruptcy due to a hacker attack.

       Kraken Bitcoin Exchange was founded in 2011 by Kraken Company from San Francisco. In November 2015 its daily turnover was about 6,100 bitcoins. To register you may go through several stages of verification, the various stages give different trade opportunities.

       Bitfinex is the world's largest platform of exchange bitcoins for dollars, with a large number of additional specialized functions. In November 2015 its daily turnover was 10,300 bitcoins. For deposit/withdrawal of dollars a sufficiently strict verification is required. The exchange from fiat money is possible only for dollars, from cryptocurrency - only for bitcoins and light coins.

BTC-E is the largest Russian-language platform for exchange bitcoins and is one of the five largest platforms in the world. There is an exchange for US dollars, Russian rubles and euros, between which the exchange directly at the internal rate is also supported. Unlike Mt.Gox, there is no requirement of identification when registering. In October 2015 its daily turnover was around 12,600.

Why Bitcoin - it's good for you and for the casino?

Every time when a player makes money via credit or debit card, bank account or e-wallet like Neteller, Skrill or PayPal, online casinos pay a significant percent for the payment service.

Most online casinos pay this fee themselves, so players haven't to do this. However, some online casinos can still charge commission from their users. In some cases, customers also pay tax to the country or the state.

Even if online casino sites cover fees associated with payment processing, the players (with hidden methods) pay the commission anyway.

This is only one of several reasons that makes Bitcoin attractive for you and for online casinos. It is also worth to note that the replenishment and withdrawals are free of charge because only there it had managed to eliminate the payment of any fees for processing accounts while deposit-withdrawal effectively. This allows Bitcoin casino sites to allocate much more money on deposit bonuses and other promotions, but most importantly, it allows them to offer the best payout in the world of gambling entertainment.

Another advantage of Bitcoin casino is its own decentralization and the absence of relations with any government or bank. Funds could't be arrested or frozen, unlike those accounts that are in the usual currency in the bank.

This is a great advantage for those who play in the highly regulated jurisdictions (such as the US and some offshore countries or Europe). However, please note that the online casinos that offer Bitcoin as additional deposit/withdrawal method, do not give that anonymity and freedom as Bitcoin casino, which works with Bitcoin only!

Bitcoin allows players to be anonymous and carry the bag freely!