Bitcoin Definition And The Way It Works
WHAT IS BITCOIN AND HOW DOES IT WORK? The world has been taken by storm by an unruly and unpredictable industry known as the Cryptocurrency industry. This all new way of living life and doing business is less than a decade in existence but has managed to amass over $300 Billion in value, most of which happened within this year alone. At the arrowhead of this industry is Bitcoin, the undisputed King among all cryptocurrencies and we are about to dissect what exactly it is.
What is Bitcoin?
Bitcoin is the first among all decentralized peer-to-peer virtual currencies that are built on the revolutionary blockchain technology. What makes Bitcoin different from all other kinds of money is that it is not issued by any government in the world and it is certainly not banked by any commercial bank in the world either. It is created by a huge network of computers spread all over the world, that solve humongous amounts of mathematical puzzles are lightening speeds with the possibility of earning a Bitcoin as a reward. Bitcoin was created in 2008 and released 2009 by a person or group that goes by the pseudonym Satoshi Nakamoto, and its key attribute which spurs its unrelenting growth is the absolute guarantee that it cannot be counterfeited, and its network can never be compromised. Bitcoin payments between users are fast, require no intermediaries and ca be sent to any part of the world with no restriction whatsoever.
How is that Possible?
Bitcoin is built on a revolutionary technology which is known as the blockchain technology. The backbone of this technology is that it is a public open ledger system that records transactions of cryptocurrencies or any other valuable asset in a way that every computer that is working within this vast network must agree that a transaction is indeed genuine before it is added on the blockchain. And with such a vast network of independent computers with no single point of failure, it is impossible for any Bitcoin transaction to be counterfeited, not by any government or single entity shut it down.
How does Bitcoin Work?
The basic tool a Bitcoin user needs in order to store, pay and receive payment is known as a Bitcoin Wallet. This is the user’s bank which must be given all safety considerations as Bitcoin transactions are irreversible as soon as they are set in motion.
The Wallet can either be a Software installed on your PC or Smartphone or a dedicated hardware wallet. Each wallet is designed as that it has a coded address that is uniquely made for it, and which bears no personal identification information of the user. Whenever the user wants to receive Bitcoins he or she needs to send this address to the sender. The best Bitcoin wallet is one that is security conscious and one that you keep completely offline, also known as a “cold wallet”, and if your Bitcoin is considerable in amount you can take a further step by buying a vault-like hardware wallet that even keeps it safer.
How do I Get Bitcoin?
There are two main ways of acquiring Bitcoin, you can either “create” it by participating as a miner on its blockchain by deploying your computer as well as specialized equipment for use. Else you can simply buy your Bitcoin from a reputable exchanger near you.
Image source Public Domain Photography
Main Image Source : Pixabay