What are bitcoins?
I am sure you must have heard these few terms again and again in the last few months and if you are like me then you must also be wondering what are bitcoins? When I first heard about Bitcoins in 2015, I too was completely unaware of this term, but due to my curious nature I could not stop myself from investigating it. Today I am writing this article so that I can share my knowledge with you people.
Ever since the decentralized digital currency has started touching highs, Bitcoin has started to rule the mainstream market. For those who are still unaware of its popularity, let me tell you that friends, just in November 2017, Bitcoin reached $ 10,000 which is almost double of its October 2017 money, and 10x the price of January 2017. It is more, and if we talk about 2010, then it is 100,000 times more than the price then. Isn’t it shocking?
Some investors are still confused about the popularity of bitcoins while some other people are taking advantage of this trend, while some people are also friends who are ready to sell their house for Bitcoin. So let’s know what this bitcoin is and why it has come in such a trend in today’s era. So let’s talk about such a 21st century currency that only exists in cyber or digital space.
What is bitcoin? What are Bitcoins ?
In simple words, bitcoin is a virtual currency. You can exchange goods or services with the help of bitcoins. When you use bitcoins, you show a 16 digit code purchaser, this code is known as your signature. When the purchaser decodes this code, then only he gets cryptocurrency. In other way, cryptocurrency is a digital information exchange with which you buy or sell a service.
Bitcoin is the origin of friends, cryptocurrency. This makes transactions more secure by using encryption. Also, due to encryption, it also controls the creation of new units by currency users. It works on a peer-to-peer computer network such as Skype or BitTorrent.
The main motive behind making bitcoins was to create a currency form that could not be controlled by any business or government. Also, such a currency that you can trade globally without any additional cost or revealing your identity.
Due to its increasing popularity, many copycats of bitcoins have also come into the market nowadays, which are known as “Altcoins”.
If you want to know more, nowadays second generation virtual currencies have also come in the market, such as Ethereum, Bitcoin Cash, etc.
So are bitcoins not like coins kept in my purse or wallet?
The first question that came to my mind upon hearing the name of bitcoins. But no friends, they are not like any coin. Rather, Bitcoins are like a line of numbered codes, yes, I am only talking about the instructions to be used in computer programming.
But once you purchase them, you can use them to buy or sell any product or services just like normal money.
Where did bitcoins originate and how did they first come to market?
Bitcoins were first created by a mysterious developer who is known by a pseudonym Satoshi Nakamoto. Bitcoins came into the market in 2013 and since then their value has gone up. It is also heard that Elon Musk (founder of Paypal, Ebay and Tesla) invented Bitcoin, but there is no concrete evidence yet.
In the original Bitcoin whitepaper, Nakamoto describes it as a “peer-to-peer-version of electronic cash” which allows any party to pay to the other party without going to a financial institution.
How do bitcoins work?
Nakamoto has written that a currency like Bitcoin allows transaction between any 2 parties using a cryptographic proof instead of trust. There is no need for any trusted third party here because everything is based on cryptography.
So let’s first know what cryptography is
Friends, the word Cryptography has its origin from a Greek word called “Krypto”. Krypto means “Hidden Secrets”. In simple words, Cryptography means “the art of protecting data or information”.
How bitcoins work
With the help of cryptography, you convert your data or information into some secret codes that are unreadable. This is called “Cipher Text”. Since it is unreadable, a secret key is required to read it. Anyone who has this secret key will be able to read and decrypt this data. When the data is decrypt, it will be called “Plain Text”.
Encryption and decryption are 2 processes of cryptography. In Encryption, plain text makes cipher text and in decryption cipher text makes plain text. This type of bank-free, stateless currency keeps a record of payment transactions using a distributed and cryptographically secure blockchain. These records of payment through bitcoins are handled by the users and their computer power is used for this. In return they are rewarded with newly created bitcoins. This process is called mining.
What are the properties of bitcoins?
1. Irreversible: Once confirmed, whatever happens, the transaction cannot be reverse. Neither you, nor bank, nor miner nor any high profile contact, no one can reverse this transaction. If you send money once, it cannot be reverse. No one can help you if you have accidentally transferred your bitcoins to a scammer. So guys, take care.
2. Pseudonymous: Neither transactions nor accounts in Bitcoins are associated with real world identities. You get bitcoins at some addresses. These addresses are random chains of 30 characters. Yes, you can analyze Bitcoin transaction flow, but in this flow, connect a real world identity with these addresses.
It is not possible to do.
3. Fast and global: Bitcoin transaction takes place almost immediately and is confirmed within few minutes. Since they occur in global computer networks, they do not depend on your physical location at all. It does not matter whether you are sending Bitcoin to your neighborhood or to any other corner of the world, the time will be the same.
4. Secure: Funds that are held by bitcoins are locked in a public key cryptography system. These systems can only be unlocked by people who have private keys. Because of the magic of big numbers and solid cryptography, no one can break this scheme. Every single Bitcoin address is more secure than Fort Knox.
5. Permissionless: You do not need to get anyone’s permission to use Cryptocurrency. This is a software that anyone can download for free. Once you have installed this software, you can send or receive bitcoins or any other cryptocurrency. No one can stop you No gatekeeper can interrupt your work.
How do bitcoins decide their value?
Like other things, the value of bitcoins also depends on the rule of “demand and supply”. Currently, 25 new bitcoins are being released every 10 minutes. But this flow will slow down soon as bitcoins are designed in such a way that no more than 21 million bitcoins can exist simultaneously and 16 million bitcoins are already in use.
How can you get bitcoins? How to buy bitcoins?
There are many ways to get bitcoins.
Cryptocurrency Exchange: Here you can find Bitcoin in your regular currency exchange.
Bitcoin ATM: Here you can convert bitcoins or cash into any other cryptocurrency.
Classified service: Here you can find a seller who gives you bitcoin instead of cash.
You can sell a product or service for bitcoins.
Even to buy 1 bitcoin at today’s rate, you should have 4 to 5 lakh rupees. If your budget is less then you can buy Satoshi.
1 BTC = 10 crore Satoshi
Friends, Bitcoin is a very risky affair, so review its reviews well before using any service.
What are bitcoin wallets?
Just as you use wallets to store your regular money, Bitcoin wallets are used to store bitcoins. These bitcoins are wallets specially designed programs that safely store your bitcoins.
You can also use these wallets on desktop or smartphone and if you want, you can also store it securely on the web so that you can access it easily from anywhere.
How is Bitcoin Mining done?