What Is Bitcoin And How It Works?
What is Bitcoin? Bitcoin is a digital currency that was created by Satoshi Nakamoto in 2009. It is a digital currency in the form of electronic cash which is used and distributed electronically. Bitcoin is a decentralized currency that works in a p2p network. It is not controlled by a single institution or person. Bitcoin transactions are made with no middlemen. In 2017–2018 price-per-coin reached to $20,000. Today some retailers accept bitcoin for online transactions.
As bitcoin is a digital currency and it was created as an alternative for decentralized payment method. The advantage of bitcoin is it reduces the transfer charges like the banking sector. Bitcoin can be used to buy merchandise secretly if both parties agree with the transaction. Due to bitcoin, international payments are easy and cheap because bitcoins are not tied with any country. Many people using bitcoin only as an investment as it will give good value to them in the future.
Who Controls Bitcoin?
The main plus point of bitcoin is independence from banks, organizations, and Government. Bitcoin is controlled by all the bitcoin users who own the bitcoin. Bitcoin is decentralized cryptocurrency spread over the P2P network and the control of the system is delegated in thousands of nodes. No authority interference into bitcoin transactions and it is totally transparent so user having total control on their finance.
How Bitcoins Are Created?
New bitcoins are generated by the process called “mining”. In the mining process, individuals are rewarded by the network for their services. Bitcoin miner, a person requires a computer and mining software like GIUMiner. This program uses the computer’s resources to perform complicated mathematical calculations. When any miner successfully solves the mathematical problem to create a new block and received a certain number of Bitcoin as a reward that is known as “Block reward”. New bitcoins are created at a fixed rate that is why the bitcoin mining process is competitive.
When a new block of a transaction is formed and verified by the user the whole block is get added to the digital ledger system popularly known as Blockchain. No central database is available to store this information every individual miner gets notified for the new block. When more miners join the network, the more difficult it becomes to make a profit for each of them.
How Bitcoin Works?
Bitcoins are the virtual coins so no need to store and move money. Once you own bitcoins they are like physical coins. User can see his or her amount of bitcoin in a wallet and the total scene handle by the massive public ledger called as a blockchain. Where all the confirmed transactions are combined into “blocks”. Once block enters into the system it is broadcast to the P2P network for the validation and it will affect all the blocks. If any fraud and mistake happen it is easily spotted and corrected by the user. The legitimacy of each transaction is protected by digital signatures corresponding to the sending addresses.
The availability of bitcoins are limited and bitcoin protocol is designed in such a way that each block takes about 10 minutes to mine.
How Bitcoin Is Different From Traditional Currencies?
How Bitcoin is different from fiat currencies. Bitcoin is used as a digital currency for 0nline transaction across the world when both parties agree with BTC.
1. Decentralized: The main behind creating the bitcoin is get the currency free from government authorities and whatever transactions happen in the network or in mining every machine and person should know about that and this is the main characteristics it is decentralized. No single organization or person can control the bitcoin network. It is run on an open network of computers spread around the world.
2. Limited Supply: As we already know that the fiat currencies like Euros, INR, dollars have unlimited supply means the central bank can issue as many as they want. But with BTC the supply is controlled by an algorithm. A small number of new bitcoin is dribbled out every hour and it will continue till 21 Million has been reached and every transaction takes 10 minutes to complete. In practically if demand goes still supply is same.
3. Transparent: Every single transaction that happens is spread across the network and get notified to BTC users and stored in Blockchain. So it is transparent to everyone.
4. Irreversible: Like traditional payment methods takes place from the middle man so it is possible to reverse the transaction but in bitcoin every time it changes hands and wallet. Once you send your BTC to anyone there is no way to get them back unless the recipient would want to send them back to you.
5. Fast: The payment processed in the bitcoin network immediately within a few minutes where i9n other traditional banking systems it will take one day.
How To Get Bitcoin?
The best way to get bitcoin is to buy them from various exchanges. You can also buy them from other peoples from marketplaces. You just need to pay with debit, credit card or by cash or simply you can use other cryptocurrencies but for that, you need a bitcoin wallet.
What Is Altcoin? An Altcoin is a digital currency similar to Bitcoin. As they think that Altcoin is a better substitute for bitcoin. Many top Altcoin follows the same ultimate building blocks as Bitcoin. The bitcoin is a free and open-source platform. An altcoin is different from bitcoin in an economical model or coin distribution method. Most altcoins are following the same framework provided by Bitcoin that is why they are peer to peer and involves in the mining process in which users solve a complex mathematical problem to unlock the blocks and get rewarded for the same
Uses Of Bitcoin 1) Spending Money Privately 2) Low-Cost Money Transfers 3) Online exchange 4) Shopping 5) Booking