Three Things to Know About Bitcoin
Bitcoin can be a little confusing–maybe you’ve heard that black markets like the Silk Road use it, or heard stories about its ever-fluctuating market value. Jerry Brito, law professor and Executive Director of Coin Center, gives you the basics about Bitcoin, from how it works, to how many there are, to who can benefit from it. Hint: It’s not just criminals.
Like any emerging technology, the first who rush in to adopt it tend to be criminals. If you think about the car, the first people to really put it to use were bank robbers, and police, who were still on horseback, couldn't catch up. Bitcoin has had some of that. Like cars, just because criminals were the first to put them to use doesn't mean that we banned or regulated them in any exceeding way. Eventually, law enforcement were able to catch up and deal with new technology being used by criminals.
An interesting thing about Bitcoin is that there will only ever be 21 million in circulation. Right now, we're at about 13 million. Bitcoin was started in 2009, and at that time, there were 50 new Bitcoins introduced into the money supply every 10 minutes, but that halves every four years, so in 2013 that halved to 25 new Bitcoins being introduced every 10 minutes, and that's where we are right now. In 2017 it'll half again to 12.5, and continue to half again and again, so that we reach about 21 million in the year 2140 or so.
I know that sounds crazy, but what that gets you is predictability. You know exactly how fast the money supply is going to grow. If you're worried that 21 million units is not enough to run an economy on, understand that Bitcoins, individual Bitcoins, can be subdivided to eight decimal places. If you take those into account, there are actually more Bitcoin units than there are currency units in the world right now.
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