Bitcoin, often referred to as a type of cryptocurrency, a virtual currency, or a digital currency, is a type of virtual money, or in layman’s term, an online version of cash that is fast becoming the currency of choice by many sports betting enthusiasts.

The idea of bitcoin was initially proposed by a pseudonymous software developer, Satoshi Nakamoto, in 2008, but was officially launched in January 2009. Unlike the government-issued currency, Bitcoin is operated by a decentralised authority and could be transferred electronically in a secure way.

What makes Bitcoin different?

It is decentralised

This is probably the most important and unique aspect of Bitcoin. Unlike the fiat currencies (dollars, euros, yen, etcetera), Bitcoin is not controlled by an organisation or an institution (such as banks). Rather, it is maintained by a group of volunteer coders.

As far as its authority is concerned, Bitcoin is controlled by all Bitcoin users around the world, without a middleman. The transactions, on the other hand, are maintained by an open network, not owned by anyone.

Limited supply

Unlike fiat currency, which has an unlimited supply, Bitcoin’s stock is tightly controlled by the underlying algorithm. A small number of new bitcoins are flown out every hour, and the process will continue until a maximum of 21 million has been reached.

How does Bitcoin work?

Every Bitcoin is basically a file stored in a digital wallet in a smartphone or a computer. In simple words, while placing a sports bet, the transactions of bitcoin use peer-to-peer technology, which means the exchange is done without the involvement of a central authority.

Every single transaction is saved or recorded in a public ledger, which is called ‘blockchain’, and the authenticity is protected by digital signatures, which allows sports bettors to have full control over it.

In order to understand how Bitcoin works, one needs to take special note of the term, 'bitcoin-miners'. The role of bitcoin-miners is to solve a computational problem which allows them to chain together blocks of transactions. And this mining is done through specialised computers.

Once the problems are solved, the miners are issued a certain number of bitcoins in exchange. In short, bitcoin mining is a process by which bitcoins are released into circulation.

How can one get Bitcoins?

Apart from all the technical methods, there are a few easy steps for existing and aspiring sports-bettors.

  1. Buy bitcoins using real money.
  2. Sell something and ask the buyers to pay you with bitcoins.
  3. Or you can always take the hard way and be the miner.

Bonus: You can also make predictions on and win them.

Feature image courtesy: AFP / Justin Tallis