Bitcoin
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BTC · 7w

[May 19, 2011] lifehacker: "And right now, the BitCoin is trading very high! As I write this, one BitCoin is worth $7.5. Not too shabby at all."

Sam Biddle —Maybe you've heard of BitCoin—it wants to shake the entire global economy. And some people think it might! It's online money—an alternative to dollars and euros. Well what's that mean? It's complicated, but we break it down.

BitCoin is a digital currency...

BitCoin is not real money. It's an online "currency"—virtual tokens that can be exchanged for goods and services at places that accept it, the same way you'd give someone a dollar for a cookie.

...with mega aspirations...

In their YouTube manifesto, BitCoin's creators say they're going to revolutionize global finance the way the web changed publishing. So! Kind of a lofty goal, aiming to be a global currency up there with (or replacing) the dollar. Right now, that's still the pipiest of pipe dreams.

...that's exchanged via P2P...

When you write your friend a check, money from your account is withdrawn from your bank, and then transferred to her bank, and then she withdraws it as cash (maybe). With BitCoin, there are no middlemen (other than the users that comprise the network itself). Money goes straight from you to whomever, through the BitCoin P2P system, with no intermediary agency passing along the chips.

...and generated by its users...

This is where it starts to get a little weird! Unlike traditional currency, that's backed up by something, (be it gold, silver, or a central bank), BitCoins are generated out of thin air. Through a process called "mining," a little app sits on your computer and slowly—very slowly—creates new BitCoins in exchange for providing the computational power to process transactions. When a new batch of coins is ready, they're distributed in probabilistic accordance to whomever had the highest computing power in the mining process. The system is rigged so that no more than 21 million BitCoins will ever exist—so the mining process will yield less and less as time goes on, and more peopl...

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What is CoinJoin?

CoinJoin is a Bitcoin transaction where multiple users combine their Unspent Transaction Outputs into one large transaction with multiple inputs and outputs