What is Bitcoin and How does Bitcoin work?

What is Bitcoin?

Bitcoin is a new kind of money. It is just like gold , a store of value and a virtual asset . But it is not gold , neither is it controlled by the government. It is an electronic currency. A kind of money that is created online , traded online and also exchanged online. Bitcoin is both a value and a means to store, transfer and manage value. Bitcoin eases the concept of value and usage of value.

Bitcoin was created as a way for People to store and send value around the world , anytime , anywhere at virtually no cost without using financial institutions or Fiat currency. The network of Bitcoin is made up of users. It is a community run system.

Bitcoin functions on Blockchain technology and is created through Bitcoin mining. A Bitcoin is the reward for solving complex mathematical puzzles.

How did it start ?

The concept of Bitcoin was outlined in 1991 . The Bitcoin story started in 2008 with an anonymous founder called Satoshi Nakamota. This happened soon after the financial crisis of 2008. The use of fiat currency was scrutinized by the Founders of Bitcoin.

Satoshi Nakamota published a document in an online cryptography forum in October 2008 and revealed the first details of how Bitcoin would work. The paper was titled Bitcoin: A Peer-to-Peer Electronic Cash System. The same is available today at bitcoin.org.

On 3rd January 2009, Nakamota mined the first block of the Blockchain. In 2010 , Laszlo Hanyecz bought two Papa John's pizzas for ₿10,000 , which is $35 . After that May 22nd is called the Bitcoin Pizza Day.

Satoshi Nakamota created Bitcoin using Blockchain technology. Blockchain is simply a method of record keeping using maths and computer science.

Bitcoin Mining : Creating Bitcoins

How does Bitcoin works

Bitcoin mining

Bitcoin mining is the process of creating bitcoin. It includes verifying bitcoin transactions and recording them onto the public Blockchain ledger. The transactions are verified by the users itself i.e. there is an absence of any Central authority.

The creation , regulation and circulation of Bitcoins are done by users themselves. Any user with mining hardware and internet access can take a part. They can contribute to the mining community.

The process of formation is based on a difficult mathematical puzzle called Proof-of-work . Every miners job is to solve the mathematical puzzle , in order to validate the transaction and earn rewards. The goal is a 64 digit number.

The network automatically adjusts the difficulty of mining so that Bitcoins are created roughly every 10 minutes . The reason they call it mining is because there's only a set number of Bitcoins that can ever be mined in the system. It's like gold mining. Only limited gold can be dug .

There's only 21 million Bitcoins that will ever be created in total.

What is Blockchain ? How does it ensure privacy?

Blockchain is a public ledger , but in a computerized form. It is secure and cheap. Bitcoins use this technology for their record keeping. It was originally started in 1991. But , it was practically adopted by Satoshi Nakamota after 20 years in 2009.

Blockchain

How does BITCOIN work

Blockchain is a chain of blocks that contains information. They are distributed ledger and are completely transparent. The blocks in the Blockchain stores data . Data entered in the blocks cannot be altered.

Block

 

Each block contains information about a single transaction between two people. The hash is unique like a fingerprint. It identifies a block and it's contents. Hash also detects changes in the block. The block also contains the hash of the previous block. The Hash of the previous block helps to create the chain of blocks and keep them in order.

The first block contains the data and the Hash only . It is called the Genesis block. Any changes in the block would disturb the hash making all the other blocks invalid. Hence it is almost impossible to disturb the working of the Blockchain resulting in less chances of information leakage or frauds.

But Hash cannot guarantee the prevention of tempering. This is why Blockchain has proof-of-work. Proof-of-work slows down the creation of blocks.

The security that Is ensured by Blockchain comes from distribution. The Blockchain uses a peer-to-peer network. When a new block is created , each node verifies it. After thorough verification , the new block is added to each node. This process ensures the privacy and security of user's data.

Bitcoin : An alternative monetary escape

Bitcoin provides an alternative to the regular monetary system. It was created to eliminate the loopholes that exist in the monetary systems which are controlled by the Central authority. People often refer to bitcoin as the future money. Here's why :

The fundamental system of banks revolves around creating money i.e. , fiat currency . The Bitcoin system is based on mining digital currencies

Banks are middlemen that facilitate the transfer or exchange of money from one person to another. Bitcoin works on a peer-to-peer system eliminating the use of a middleman.

Banks can issue as much currency as they want but there are only 21 million Bitcoins that can be created.

The central governed banks are deeply engrossed in corruption and basically hold all the power in the system. Whereas Bitcoins are free from any type of corruption or temperament and run smoothly .

Central banks take away all the control from a user in managing their own money. Bitcoins on the other hand gives the control to the users to handle their own money.

Banks charge you interest and benefits from your money. Bitcoin operates for free of cost , rather earn you a profit on your investment.

The economic crisis of 2008 which literally shook the financial system of the world gave rise to this parallel economy.

How does Bitcoin work ?

Bitcoins are digital currencies. They function by updating the Blockchain ledger. Everytime a new transaction takes place , a new block is added to the chain.

Each hardware that contributes to the network of Bitcoin users gets a copy of this ledger and personally verifies the transaction.

Every user is updated about the new transaction and they record the same into the public ledger.

Bitcoins are a store of value and are used as a replacement of fiat currency. Bitcoins can be used for transfer of values , payments for good and services ( applies only at limited places) , store of value and exchange of the same.

Can Bitcoins be converted to cash ?

Bitcoin

 

Bitcoins are the new currency. And it can surely be converted to cash or your regular fiat currency.

This can be done by trading your Bitcoin on a crypto exchange market i.e. you can sell bitcoin for cash .

In case your bank supports and accepts Bitcoin as a legal tender , you can encash your Bitcoins for cash there.

Bitcoin ATMs allow you to buy and sell bitcoin with fiat currency.

You can also choose a peer-to-peer platform to exchange , trade or sell your Bitcoins for cash.

Is Bitcoin a good investment ?

What is Bitcoin

"The days of a currency being tethered to a central bank are coming to an end." - Miami Mayor @FrancisSuarez .

This is the right time for you to step up your investing game and invest in the future currency today itself .

Trading in bitcoin today has become as simple as buying groceries. You can exchange , buy and sell Bitcoins easily on various crypto platforms

Eg: WazirX , Binance , Coinbase , etc.

BITCOIN Is the best you can do right now , so dive right in and enjoy the ride without having FOMO.

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