What Is Bitcoin?
Bitcoin is a form of electronic cash i.e. a cryptocurrency. It works on the concept of decentralized network which means a single bank or centralised authority have control over it. It works on the mechanism of P2P (peer-to-peer) without any involvement of a mediator. The transaction being made in bitcoins are being monitored at nodes via cryptography and recorded in distributed ledger, popularly known as blockchain.
Bitcoin was being developed by an unknown person or group of people under a single name Satoshi Nakamoto in 2009 as an open-source software. These bitcoins are exchangeable for other currencies in the market. The value of bitcoin reached sky-high in 2017 which made bitcoin a hot topic. A prediction about bitcoin against its future made by Rick Falkvinge claims that “Bitcoin will do to banks what email did to the postal industry.”
Properties of Bitcoin(Transactional):
1.Irreversible: After affirmation, an exchange can’t be reversed by any means. On the off chance that you send cash, you send it. In the event that you send your assets to a trickster, the bitcoin is lost forever.
2.Pseudonymous: In this no address or account is being linked to your real world identities, it beholds the group or chain of random 30 characters which can be used to verify and monitor flow of transaction over the internet.
3.Fast and global: Transactions made are really fast over network. They are carried out and confirmed in just a couple of minutes. It happens over a network of computers which are completely indifferent to your physical location.
4.Secure:The transaction of bitcoin is completely secured as it uses the cryptographic methodology for the process. Anyone with a private key can send cryptocurrency. The bitcoin network is more secure than the Fort Knox.
5.Permissionless: One doesn‘t have to ask anyone to use cryptocurrency. It‘s a mere software which anyone can download for free. After installing, one can receive and send Bitcoins or other cryptocurrencies.There is no gatekeeper.
Where to Search for Bitcoins ?
One can buy them mainly in these possible four ways:
- From the cryptocurrency exchange, one can exchange cash or any currency for the bitcoin.
- From the bitcoin atm, one can have the bitcoin in exchange for cash or other cryptocurrencies.
- From the classified service provider, who can help to trade in bitcoins in exchange of money.
- By selling assets or services in exchange of bitcoins.
Behind the scenes of bitcoin:
The bitcoins work on the popular ledger called blockchain, where all the affirmed transactions are called blocks. As the blocks enter the network, it broadcasts it to every peer in that network for validation which makes everyone aware of the transactions which prevents theft as well as double- spending.
Unlike any form of traditional currencies, the bitcoin has no central monitoring authority.
How to Store Bitcoins?
The biggest problem after buying the bitcoin is where to store them. One can use a cryptocurrency wallet to store them. There are mainly three types of applications:
Full client – It is a standalone email server which tracks all aspects of the process without depending on third-party servers. It will control their whole transaction from beginning to end. This is not for beginners.
Lightweight client – It is a standalone email client that collaborates with a mail server for access to a mailbox. It stores user’s bitcoins, which requires a third-party-owned server to access the network and make the transaction.
Web client – It is completely the opposite of “full client” and similar to webmail in that it totally depends on a third-party server. Here,the third party controls and operates the entire transaction of its user.
Mining keeps the Bitcoin procedure secured by sequentially adding new transactions to the chain and keeping them in the line. Blocks are hacked off as every transaction is settled, codes decoded, and bitcoins passed.
Miners can generate new bitcoins by using a special software which is used to solve cryptographic problems which provides a smart way to new currency and incentive for people to mine.
Disadvantages of bitcoin:
The practical problems that concern bitcoins are hacking and scams. Basically, there are four types of scams which are Ponzi schemes, mining scams, scam wallets and fraudulent exchanges.
- Ponzi Scams: These are high-yield investment programs, which provide higher interest than market rate (e.g. 1-2% interest per day) and redirects that money to the thief’s wallet. They also emerge under different names in order to protect themselves.
- Bitcoin Mining Scams: These companies will offer to mine outrageous amounts of bitcoin for you. You’ll have to pay them. That’s the last you’ll see of your money (with no bitcoins to show for it, either).
- Bitcoin Exchange Scams: Bitcoin Exchange Scams offer features that other trusted bitcoin wallets don’t offer, such as PayPal/Credit Card processing, or better exchange rates. .
- Bitcoin Wallet Scams: Bitcoin scam wallets are quite similar to online wallets – with a bit of difference. They’ll ask you for your money. If the thief likes the amount, that’s the last you’ll see of your deposit. The address, in other words, leads to them, rather than to you.
Advantages of bitcoin:
The best part about Bitcoin is that it is decentralized, which means that one can settle international deals without messing around with exchange rates and extra charges. It is free from government interference and manipulation. It is also transparent,so one knows what is happening with their money.
So, in short the bitcoin is trending which can demolish the difference between rich and poor and can shake up the centralised monetary system. It’s the upcoming future for any transactions across the world. Tyler Winklevoss, popular for his alleged association with Facebook sums it up as “We have elected to put our money and faith in a mathematical framework that is free of politics and human error.”