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Cryyptocurrencies, and in particular Bitcoin, have been all over the news lately. While many people are entranced at the idea of easy money flowing from the mere act of owning one or more of these precious trophies, careful investors would like to know more about what they actually are and why they might be a good investment in their own right and not just as a speculative bet.

In a recent article, London-based entrepreneur David Azzato provides some useful background information on the whole Bitcoin universe. As a starting point, he explains how the so-called “mining” process works. It is actually more akin to a really intense session of accounting performed as a group activity.

Every time a Bitcoin transaction occurs, the blockchain which constitutes the entire record of every transaction ever made has to be updated. This obviously requires a lot of energy which is then used to power the computer processing capability necessary to carry out this necessary function. This expenditure of time, electricity, and computer hardware is paid for with new Bitcoin. This new Bitcoin comes out of the as-yet-unmined stash of approximately 2 million Bitcoin and is transferred to the account of the miner as payment for his services. Now that it is out in the realm of circulating Bitcoin, the miner is free to spend or save it as he sees fit.

Inside its own transactional world, Bitcoin is basically anonymous, since it is held in a place which requires “keys” to access. Yet these keys are not tied to anybody’s specific ID. This keeps them private but also raises the risk of someone else gaining access to the keys and transferring that Bitcoin out of your account and into theirs. It also requires caution on the part of the key holder even apart from the risk of it being stolen. If the key holder loses or forgets the keys to his bitcoin, it is as if he just robbed himself or set his bank account on fire. You are on your own. There is no third party who can help you recover your losses.

David Azzato also has some cautionary words about growing central bank and governmental resistance to Bitcoin. There is obviously a lot more to know about the Bitcoin saga but the David Azzato article on Medium.com is a good place to start since he is neither being a Bitcoin booster or basher, merely a calm explainer of the underlying realities.

Click on the link to find out more: https://www.quora.com/profile/David-Azzato

Lara Andreyes