Bitcoin is a word we all hear quite repeatedly for all the right and wrong reasons. To an average tech guy or even a financial broker or investor, it is fairly common, but to a common man like most of us, it is still an unknown entity.
Rise of BitCoin & Satoshi Nakamoto
In late 2008 a person named Satoshi Nakamoto published a whitepaper.
In which he described a new digital currency system and function of this new currency. Till this date, nobody knows who was Satoshi Nakamoto and most believe that it was a pseudo name used to hide real identity and time to time there emerges possible identities of him.
- It is a form of cryptocurrency which relies on blockchain technology. By means of cryptocurrency or crypto (short form of cryptocurrency), it is a digital currency or digital money that uses cryptography to secure its currency transactions.
- As it is a digital currency there is no physical transaction and you will not find any physical coin of it. All transactions are in the virtual world, all transactions are recorded in a ledger called Blockchain and this is shared among all the users. It is just data.
- Thus it is a full-proof system in terms of digital transactions.
- Basically, to use a Bitcoin, you need Bitcoin; which can be purchased from others using physical currency, or even you can mine Bitcoin by solving a mathematical puzzle.
- Now to earn Bitcoin some people do Bitcoin mining! What happens that every ten minutes or so mining computers collect a few hundred pending bitcoin transactions (a “block”) and turn them into a mathematical puzzle? The miner who found the solution gets 25 Bitcoin as a reward and thus they are generated (but only after another 99 blocks have been added to the ledger).
- Thus by solving mathematical puzzles you can earn Bitcoin but it is not easy. As sometimes the expense on computers (it can be a computer network) and electric power is much higher than the market value of earned Bitcoin. Still, some people are heavily involved in mining which is also known as the bitcoin network.
- There are so many websites and companies that help your mining activity by charging you some fees just like banks.
How to sell or buy using BitCoin
- Now let us take an example that you need to buy a Laptop and Shop owner accepts Bitcoin. Now to pay Shop owner you first need to know his public key (digital alphanumeric number).
- Then using your private key you initiate a transaction which in turn gets received by Shop owner by using his own private key. Once the transaction gets completed you get your laptop.
- Now let me explain this in a very easy way. You want to send some Bitcoin to me. Then we both should have public key or address and a very personal private key to authenticate transactions. Now to send using your private key you initiate a transaction to me by my public key. At the other end, I will use my private key to receive Bitcoin.
- In the real world, transactions are done by using Digital Wallet or bitcoin wallet and the above-shown transactions are automated and done in a very user-friendly way. Moreover you will find an app for bitcoin in App store or Play store.
Value of BitCoin
Now you must have thought that in this method anyone can create Bitcoin as per his need and there will not be any importance or value of a currency. To keep this thing in mind creator Satoshi Nakamoto has kept a limit of 21 Million Bitcoins.
- Satoshi Nakamoto has created exactly a 21Million BitCoins.
- Therefore in all, there will be a maximum of 21 Million Bitcoins.
- This rarity makes it quite costly. So costly that at one time it was valued at almost 61283USD per 1 BTC!
Why Bitcoins and Why not.
“Each and every transaction is secured and private. That means you don’t have to pay taxes or fees to the Government or Bank.”
- This is the prime reason some countries have not officially accepted Bitcoin and its transactions as a currency or money.
- While some countries have accepted as currency and they do not prohibit transactions. They even allow buying or selling through.
- Also Read: How to protect yourself online
Therefore it is my advice, if you want to deal in Bitcoins do consider government and banking norms and regulations in your region.
Do keep in mind that it is a Digital Currency It is not a physical currency that can be carried in your pocket while shopping.
Till next time take care.