Last Updated on August 31, 2021 by Sagar
What is Bitcoin? Explained Everything In Detail
The value of 1 Euro is 79.38 INR and the value of 1dollar ($) is 70.62 INR but the value of 1 bitcoin is 5,30,381.74INR. Do you know Why? Did you ever hear the name bitcoin? If Yes, Have you tried to know What is bitcoin? Why its value is so high and is increasing day by day? Why everyone is rushing to invest in bitcoin? How it can earn you money? Blah! Blah! Many such questions might be revolving in your mind.
Bitcoin is the talk of the market these days. In this article, you will get all the answers to your question. I have tried my level best to solve all your queries by covering the following topics-
1. What are bitcoins and their properties ?
2 Its origin and who was the inventor of bitcoin
3. Where to find bitcoins?
4. How Bitcoin works?
5. What is bitcoin mining?
6. How buying and selling are done in bitcoins(trading in bitcoin)?
7. What are blockchains?
8. Bitcoin hidden details
9.Advantages and disadvantages of investment in bitcoin
What is bitcoin?
Bitcoin is a form of electronic cash which is called cryptocurrency. Now, what is a cryptocurrency? Cryptocurrency is a digital currency in which encryption techniques are used to manage the generation of units of currency(converting information or data into a code, especially to prevent illegal access) and verify the transfer of funds and it is operated independently means it is not under the control of any central bank.
Transition is made to and from 16 character encrypted addresses. These addresses are mathematically secured so that it cannot be hacked or decrypted by any third person except the owner of the address that belongs to it. The purchaser needs to decode the code in order to receive the sender’s bitcoin. The transaction gets its safety and belief from a peer-to-peer computer network, which is similar to BitTorrent or any simple file-sharing system.
Properties of Bitcoin
Bitcoin Transitional properties are Irreversible: After confirmation of the transition, it can‘t be reversed. Nobody can return it to you, neither any bank nor your government. Even the president of the US cannot help you out.
It is Quick and connected globally: Transactions are circulated almost immediately in the network and get approved in a couple of minutes. As it functions in a global network of computers, they are totally different from your physical location. It does not matter whether you send Bitcoin to your next-door-neighbor or any other person in the world.
Users are Semi-anonymous: As no accounts are linked to a real-world identity. You get bitcoin on the basis of address, which seems randomly chained about 30 characters. Although it is generally possible to analyze the flow of the transaction, it is not possible to link the real-world identity of the users with those addresses.
Secured and Permissionless Strong cryptography and magic of large numbers make it impossible to break this plan and make it more secure. Bitcoin’s address is more secure than any bank’s security.No hacker can decode it except the owner of the address. It is an open-source where you dont need any permission to use bitcoin. Anybody can download its software for free. After installation of the software, you can send and receive bitcoins absolutely for free without asking anyone.
Its origin and the inventor of bitcoin
Bitcoin is based on the concept called “Cryptocurrency”.The first Bitcoin term and proof of concept were published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in 2010 without revealing his real identity. He had been not seen after this proposal.
This community was rapidly growing with many developers working on Bitcoin. Some researchers also claim that Satoshi Nakamoto is possibly a group of companies where Satoshi is a combination of first letters of Samsung and Toshiba whereas Nakamoto is a combination of first laters of Nakamichi and Motorola. Although there are many theories about Satoshi Nakamoto, In real no one knows the proper truth about him.
Where to find bitcoins?
If you wish to find and get Bitcoin, I strongly recommend you to read the article given below in-depth
You can receive your bitcoins from these four sources.
- A cryptocurrency exchange where you can exchange general currency for bitcoins. Example: Coinbase and Coinsquare in the US & Canada.
- A Bitcoin ATM where you can exchange bitcoins or cash for another cryptocurrency. Examples: Some reliable bets are BTER and CoinCorner
- Earn bitcoins through competitive mining.
- Sell goods or services to get bitcoins. Examples: Purse is one of the excellent sites.
In some cases, you may find individuals who wish to sell Bitcoins in exchange for a credit card or PayPal payment but the problem is most of the exchange markets don’t allow payment by these methods because many think it is notorious for scams. This is because sometimes many we can see scenarios where someone buys Bitcoins with PayPal and then reverses the half transaction (called a chargeback).
Also read: What is blockchain technology?
How Bitcoin works?
According to the users of bitcoin, Bitcoin is just a mobile app or computer software that gives a Bitcoin wallet and enables a user to send or receive bitcoins. It is the basic way of working with bitcoin. Bitcoin works on a huge public record, also called Blockchain.
These records contain each and every transaction ever processed and also allow a user’s computer to verify the validity of transactions. The authenticity of each transition is guarded by digital impressions matching to the sending addresses, enabling any users to have control over transferring bitcoins from their own Bitcoin addresses.
By using the specialized hardware of computers anyone can process the transaction and can earn a bonus in bitcoins for these services. This is also called bitcoin mining. To know more about bitcoin mining, Please continue your reading.
What is bitcoin mining?
Bitcoin mining is the process where high-performance computers are used to complete the transaction, to keep everyone synchronized together in the system, and maintain the security of the bitcoin network or in simple words, mining is used to issue fresh bitcoins.
Miners do this by solving a specialized program that enables to “chain” together “blocks” of transactions which is called Blockchain. It is just like the Bitcoin data center except that it is designed to be fully decentralized where all miners from the globe operate mining but no individual has control over it. It is someway like gold mining because it is also a temporary method that is used to withdraw new bitcoin. For this work, miners are awarded by some transaction fee(sometimes they are awarded some units of bitcoins)
How to mine bitcoin:-
- Buy bitcoin mining hardware like Dreagonmint 16T.
- Choose a mining pool. (Mining pool is the pooling of resources where miners share their processing power over a network in order to split the reward equally)
- Use bitcoin mining software like RPC miner for Mac OS.
- Make sure that bitcoin mining is legal in your country.
- Also, make sure that bitcoin mining is Profitable for You.
Also read: How cryptocurrency mining works?
How buying and selling is done in bitcoins(trading in bitcoin)
As we know bitcoin is a cryptocurrency that does not has any physical form, unlike other currencies. So, You may imagine how trading of bitcoin is possible if it has no physical form? so here is your answer. You just have transaction records of different addresses with balances that are stored on the blockchain.
First of all, you need to download and sign up for a bitcoin wallet but remember the bitcoin wallet is for your private key, not for bitcoin storage. You have choices to make an entry in the bitcoin universe by playing as a day trader and can use a regulated exchange such as GDAX or else you can find local traders to trade bitcoin.
But in present, the most popular way to purchase bitcoin is by using a regulated exchange like GDAX which is owned by the coin base. Even coinbase is struggling to keep speed with demand. You can buy bitcoin by paying directly from a bank account, cash, credit card, debit card, or by a wire transfer which may take time.
What are blockchains?
Blockchain is a collection of data that represents a financial ledger entry, transaction record. In the blockchain, data is entered in a block, by combining it with other blocks in the chronological order and creating a series of linked blocks together. Every step is digitally signed to assure its authenticity. It is a ledger that is scattered over the network. Each block has data and blocks combine together to form a blockchain.
Bitcoin hidden details
Some hidden details of bitcoin are as follow:-
- No one knows perfectly when the first bitcoin was discovered. Some believe that the birthday of BTC is on 3rd, October 2008 while others think on 3rd, January 2009.
- Still, the world does not know who created the first bitcoin. It is just a mystery. Some say that Satoshi Nakamoto created bitcoin who was a Japanese citizen.
- Some researchers claim that Satoshi Nakamoto is a group of companies where Samsung and Toshiba make Satoshi while Nakamichi and Motorola make Nakamoto.
- On May 22 it is celebrated as Bitcoin pizza day because on 22nd, May 2010 two papa john’s pizzas were traded by Laszlo Hanyecz for about 10K bitcoins which was about $41 at that time but now(on 20th, May 2019) it is around $78M.
- You can only buy bitcoin if you have a private key. But if you lose it then you lose your bitcoin because without it the funds are lost forever.
- There are about 21 million in the world from which 16.3 million have already been mined.
Advantages and disadvantages of investment in bitcoin
- You can buy and sell bitcoins with anyone in the world and at any given time
- You will not face any third party interruptions. There is no way to disrupt user transactions or block any bitcoin accounts by governments, banks, and other financial organizations
- You will not face any taxes as there is no involvement of the third party authorities
- Since Bitcoin transactions don’t have intermediary institutions or government involvement, the costs of transacting are very low
- Bitcoin users can pay for their coins anywhere they have Internet access like any other online payment apps.
- Many investors unaware of bitcoin and they have a lack of understanding about it.
- Bitcoin is very limited and the demand for bitcoin is increasing day by day.
- Its price is very high and requires too much electricity to get it.
- Bitcoins have grown in recent years but it still in development.
- You can lose bitcoin if you lose your private key if your hard drive crashes or any other way
- Due to the anonymous nature of bitcoin, it is used in several illegal activities.
Friends I have covered almost all the points related to bitcoin. I hope you have got complete information about bitcoin. If you find it beneficial then you can start doing business with bitcoin and earn money from it. Guys for more such topics Please subscribe to my website, if you have any doubt then give a comment and share it with your friends