Many people would assume Bitcoin is a cryptocurrency, the digital currency making rounds everywhere only recently, however, that’s not entirely true. Bitcoin has been around for quite some time, which means it has not made its debut recently. In fact, it was created by an unknown person using the code-name, Satoshi Nakamoto back in 2009. Since then Bitcoin has not looked back. What came as a complete surprise was when Bitcoin’s value skyrocketed significantly into thousands in 2017, putting it as a regular fixture in the headlines and becoming an overnight sensation. All the hype revolving around Bitcoin is all about getting rich by trading it.
Despite Bitcoin becoming an instant success among the users, buyers, and investors, there was a lot of conjecture about what it was all about. Many users still have no idea what Bitcoins really are, how do they work and how they can be acquired and owned. In this post, we have tried our best to enlighten you with the basic introduction about Bitcoin. Let’s start getting to know Bitcoin better.
What is Bitcoin?
As discussed briefly above, Bitcoin is a cryptocurrency and an innovative payment network that uses the peer-to-peer technology. It is the first decentralized digital currency which means it operates without the involvement of any central authority or banks. Yes, that’s right. Bitcoin does not have back of any bank or central authority; it works on its own. Since the network is peer-to-peer, all the transactions carried out between users is direct, with no intermediary or middlemen in between.
Who created Bitcoin?
When Bitcoin was first created by an unknown individual under the pseudonyms Satoshi Nakamoto, nobody knew what sort of success it can become one day. The original creator did not reveal anything about himself and chose to leave the project in 2010. Since that time, Bitcoin has seen a tremendous exponential growth. Though there were unjustified concerns and speculation about Bitcoin because of it being open-source in nature. Its design and software code is available in public, meaning any developer can modify or review it. It’s not owned and controlled by anyone so any person can take part in reviewing or modifying its code.
Bitcoins can be used to buy limited amount of merchandise anonymously. People can prefer Bitcoin over other payment systems because the intermetal payments are easy and cheap as Bitcoins are not subject to any country’s regulation. In fact, Litecoin and Ripple are said to be comparatively faster than Bitcoin. It’s possible to book hotels on Expedia through Bitcoin. On the other hand, you can also redeem Bitcoin to deposit funds into your Microsoft account and then use them to buy movies, games, and apps in the Windows and Xbox stores. Similarly, you can also purchase furniture from Overstock using Bitcoin.
Potential businesses can benefit from this payment system in the future when more developments are made. There is a possibility that more businesses may start preferring Bitcoin payment system over the conventional methods. Some investors, especially those who have surplus amounts of money, can purchase bitcoins as an investment with a hope that their value will shoot up sooner or later.
How Bitcoins Work?
Since there is no central authority looking over Bitcoins, they do not need anything to move or store the money. They are virtual coins that behave just like physical gold coins because they possess value and can be traded.
Bitcoins can be transferred to other people using mobile apps or computers. It works similar to sending cash to someone digitally. Basically, from a user’s point of view, Bitcoin is just like a dedicated small hardware device which can be plugged into their computers or mobile phones. This cryptocurrency hardware wallet is a digital wallet, enabling a user to send or receive bitcoins. Nano Ledger S, Exodus, and Trezor are a few examples of
Bitcoins are stored in a digital wallet, which works just like a virtual bank account, allowing users to send or receive bitcoins, purchase limited goods, or simply store them, hoping for its value to increase in the coming time so you can benefit from the soaring profits. This digital wallet is protected, secured, and backed up with private keys.
There’s a massive public ledger or a public log called the ‘blockchain’ in the Bitcoin network. This public ledger contains each and every transaction ever processed, enabling the user’s computer to verify the validity of each transaction. The names of the buyers and sellers are not revealed in this public ledger, only their wallet IDs are revealed. The validity of each transaction is secured by digital signatures corresponding to the sending addresses, therefore users have full control over sending their bitcoins to others.
To put it into simpler words, there are no chargebacks, no fraud, and no leaks of identifying information that could ultimately lead to identity theft.
Bitcoins can be acquired quite easily. There are many marketplaces known as ‘Bitcoin exchanges,’ allowing people to buy or sell bitcoins using different digital currencies. Some of the leading examples of Bitcoin exchanges are Coinbase, Bitstamp, Bitfinex, Cryptsy, and BTCChina.
However, when you’re buying or selling Bitcoins through the marketplace, security may be a concern. Bitfinex has been subject to cybercrime in the past. Back in 2016, bitcoins worth tens of millions of dollars were robbed from Bitfinex. The best approach to keep your digital wallet protected is not to share the private keys with anyone. Since Bitcoin transactions are secured by military grade cryptography, no other person can make a payment on your behalf or charge you money.
Bitcoin does not require any credit card number so it’s not possible for any hacker to steal your information and impersonate you. With Bitcoin, you can also send a payment without revealing your identity, just like you do with physical money.
It is not necessary to invest thousands of pounds to get hands on a single bitcoin. The fraction of one Bitcoin can also be purchased. For instance, you can get 0.01 Bitcoin with just £50.
The future of Bitcoin, however, still remains a question. No one can really say what future holds for Bitcoin as it is mostly not regulated. Though some countries like Australia, China, and Japan have started weighing regulations on Bitcoin, their governments are still concerned about their lack of control over the cryptocurrency as well as taxation. Despite knowing about the uncertainty of Bitcoin, some investors are still plunging their funds into Bitcoin investment with a hope to receive higher returns at some point in future.