![]() ![]() What was hacked in these cases was the website and not the bitcoin network. There have been several high profile cases of bitcoin exchanges being hacked and funds being stolen, but these services invariably stored the digital currency on behalf of customers. Cracking this is, for all intents and purposes, impossible as there are more possible private keys that would have to be tested (22 56) than there are atoms in the universe (estimated to be somewhere between 10 78 to 10 82). The cryptography behind bitcoin is based on the SHA-256 algorithm designed by the US National Security Agency. The digital currency was intended to provide an alternative payment system that would operate free of central control but otherwise be used just like traditional currencies. What is the purpose of bitcoin?īitcoin was created as a way for people to send money over the internet. But this is true for many of the world’s most stable national currencies since leaving the gold standard, such as the US dollar and UK pound. Nothing inherently valuable underpins the bitcoin network. There is no official mechanism built into bitcoin to convert to another currency. There are numerous cryptocurrency exchanges online where people can do this but transactions can also be carried out in person or over any communications platform, allowing even small businesses to accept bitcoin. Can bitcoin be converted to cash?īitcoin can be exchanged for cash just like any asset. A person could simply memorise their private key and need nothing else to retrieve or spend their virtual cash, a concept which is known as a “brain wallet”. A private key is used to prove ownership of funds to the network when making a transaction. In truth there is no such thing as a bitcoin or a wallet, just agreement among the network about ownership of a coin. Bitcoins can currently be subdivided by seven decimal places: a thousandth of a bitcoin is known as a milli and a hundred millionth of a bitcoin is known as a satoshi. ![]()
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