What Is Bitcoin? Here’s Everything You Need To Know | Cryptocurrency

You may have heard of the term “Bitcoin” which is the hottest topic and a frequent point of discussion amongst people and it is also one of the most desired cryptocurrencies today. In spite of that, this concept of crypto currencies remains a sea of unknown to many of us.

Hence, in this article we will discuss everything you need to know about the Bitcoins; Crypto Currency. Before diving into the Bitcoins, let’s scrutinise what Cryptocurrency is all about.

A ‘Cryptocurrency’ is a digital currency or a virtual currency that uses encryption techniques (converting data from a readable form into an encoded version which can be decoded by an authority that has the decryption key). And at present t least to say 800 cryptocurrencies are there. One of the most popular amongst them is “Bitcoin”.

What is a Bitcoin

Now as we know, a bitcoin is a digital currency which was launched in the year 2009 by an unknown programmer or a group of programmers, under the name Satoshi Nakamoto. This currency is not backed by any government bank; the transaction takes place between users directly i.e. without any mediator. And these transactions are recorded by public distributed ledgers (account book) called “Blockchain”.

To be more precise about the Bitcoins, it is important to elucidate a little about the Blockchain System first.

Don and Alex Tapscott, the authors of Block Chain Revolution, define blockchain by stating that

It is basically a platform that enables Cryptocurrencies such as Bitcoin and more like it to be exchanged. It also clears the way for a secured online transaction by recording transactions across many computers so that the record cannot be altered afterwards. To understand it more clearly we can use an example of Wikipedia; the content of this site is not by an exclusive publisher, no one person controls the information, multiple users can add to it and edit freely online. However what makes it network model is that it is built on a World Wide Web (WWW). Any user associated with its account can change the entries and whenever someone login to the wiki page, they will see the new and updated version of the same content. However, the control of the database always lies with the Wikipedia administrator.

Bitcoin Real Time Price

How does Bitcoins Works

A source has explained the functionality of a Bitcoin by saying that

So, a Bitcoin is like any other currency like Indian money, US Dollar, Euro, Pound etc. However, there is one big difference between all the other traditional currencies and Bitcoin is that it is completely decentralized (nothing is managed or controlled in one place). Bitcoins, instead of being processed by a central system, the money will go straight to the person or entity you trying to give money to.

They also works with a Blockchain System as discussed above. A blockchain acts like a ledgers which is coated onto the Bitcoin. Why these blockchains plays an essential role is that no single coin can be spent more than once before going to its original new recipient, otherwise people would buy as many things as possible with the same coin with only the person who sold the original purchase would actually receive the money.

What is ‘Bitcoin Mining’

As we know, in centralized system the government decides where to print the paper money and how to distribute it. However, Bitcoin is not a centralized system.

Bitcoin has a ledger which is distributed amongst every participant and anybody who is associated with the network has a copy of it on their computer which goes all the way to the history of the network when it was first created in 2009.

It also has a system through which new information gets registered to the ledger and this is when miners come into the play. They listen for transaction messages that are validly signed on the network and they put them under the block i.e. Blockchain. In short, the miners relaying transactions, validating signatures, putting them into a block, adding them into the blockchain and distributing them to all the people into the network. In exchange to this service, they are rewarded by getting the authority to have transaction without any input.

How to Acquire a Bitcoin

There are various ways you can collect a Bitcoin, which are as follows:

• As a payment for goods and services
• You can also purchase a Bitcoin at a Bitcoin Exchange
• You may also exchange your Bitcoins with people around you

Advantages of a Bitcoin

There are various advantages of a Bitcoin which are as follows:

1. As Bitcoins are virtual currencies, one can transact it anytime and anywhere. They are not accountable to any bank holidays, borders or authorities. Because of its being decentralized, the users get the full control of their money.
2. The best part of these coins i.e. it does not require any fee. However, fees have an effect on the faster confirmation of your transactions.
3. These coins deal with a question of safety and security. But it is important to note that these coins do not contain any personal information of the users, hence the transactions of Bitcoins are safe, secure and irreversible.
4. Another benefit of the benefit of the Bitcoin currencies is that it saves all the administration cost unlike the traditional centralized system
5. Every information of the transaction of Bitcoin is recorded into a Blockchain for anybody to verify and use in real – time. No force can control or manipulate it as it is cryptographically secured.

Disadvantages of a Bitcoin

Everything has pros and cons. Read below to know some of the disadvantages of Bitcoin:

1. Bitcoin has become a colloquial term. However, the concept remains unclear to a large number of people. And the network effect is yet to grow.
2. As the networks of Bitcoins are still small, hence its value remains cramped to what they could be.
3. Bitcoins is still under development as it has incomplete features. New features, tools and services are still under development to make Bitcoins more secure and accessible to the masses.

FAQs