What is Bitcoin? All you Need to know about Bitcoin
What is Bitcoin
Bitcoin is a digital currency which was coined in 2009 by Satoshi Nakamoto. It uses decentralized technology for storing money and making payments which do not require people’s names or banks. It is an open source which means that other developers can modify the software and tweak it. Bitcoin payment does not need any fragment of trust from the parties involved. Transactions happen by sending currency to a specific Bitcoin address.
How Does It Work?
One thing with online transactions is that they can be easily manipulated. Online companies such as Paytm and PayPal have a trusted authentication system for each transaction. Bitcoin uses an authentication system known as blockchain for maintaining records. Blockchain refers to a public ledger that records all the transaction conducted. The transaction is distributed to every machine that is connected to the Bitcoin network. The blockchain cannot be edited easily. Instead, when a transaction occurs, computers which are on the network automatically identify the balances of the Bitcoin addresses involved in the transaction and edit the ledger.
In every 10 minutes, a new block is formed as Bitcoins are mined. The miners are supposed to confirm all the transactions because the last block is added before adding a new block into the chain and redistributing it. Hence, no one can forge or steal Bitcoins just by changing few numbers. Every transaction has figures which can be rechecked to identify fake payments. Additionally, in Bitcoin, payments are not reversible like PayPal and Skrill, and one’s account cannot be frozen.
What makes Bitcoin special
Does not require a third party
Most of the other currencies depend on third parties such as banks or payment processors such as Master cards and Visas who should verify the transaction. The third party ensures that the payment was truly received. However, as stated above, the bitcoin transactions are recorded in public ledger referred to as bitcoin blockchain. The information can be publicly viewed on Blockchain.info and cannot be deleted or edited. Thus, only the transactions act as a proof of any transaction that is done. Moreover, Bitcoin is programmed such that no double spending can occur.
It is a decentralized currency
That means no individual, government or group hold authority over it. Hence, it can be used as a mode of payment anywhere in the world so long as the receiver accepts it. It is a currency that is free from geographical boundaries that is why bitcoin is also known as the currency of the internet.
How Bitcoin is Acquired
When mining, one will need to purchase mining equipment, rent/get a dedicated space for them and pay their associated costs such as cooling costs, electricity, and rental. Mining bitcoin can be very profitable. However, it is not cost effective for an individual.
One can purchase bitcoins from many online platforms. There are many platforms where one can purchase them than before. There are country specific bitcoin and global bitcoin exchanges. Also, they can be purchased via Localbitcoins.
Working for bitcoins
Some people will prefer to be paid in bitcoins instead of cash currencies. This happens on websites such as XBTFreelancer and Coinality.
Also, one can acquire bitcoins from bitcoin faucets which pay when one looks at specific advertisements. Additionally, one can get them as donations or bitcoin investments.
How to send/receive/ spend Bitcoins
Bitcoin wallets have bitcoin addresses which represent a destination which is an email address. The addresses are alphanumeric between 27 – 34 characters lengthwise. The bitcoin providers have user-friendly interface which allows the users to produce bitcoin addresses, receive and send bitcoins.
When sending bitcoins, the users must ensure that there is a positive balance in their wallets, insert the receiver’s bitcoin address then click send. A small fee is charged for the transaction. Miner’s fee is given as an incentive or reward for maintaining the bitcoin equipment. The Bitcoin transactions take less than an hour, and it can take shorter or longer depending on the bitcoin service provider.
Some political parties and politician have negative views about Bitcoin. Many countries have cautioned the public against the risk nature of Bitcoin. French and Russian lawmakers are considering prohibiting the use of Bitcoin.
Lack of acceptance
Hard cash is one of the most accepted forms of payment. On the other hand, Bitcoin is only accepted in a few shops. Nevertheless, Bitcoin debit cards have been used to address the issue linked to payment processors with the aim of making bitcoin spending easier.
Lack of protection
Bitcoin is not considered as a legal mode of payment in most countries around the world. However, the legal structure is changing, and the best place to update oneself on bitcoin acceptance is Bitlegal.io.
The bottom line is that the underlying technology behind bitcoin transaction the blockchain is unique. It is a cost-effective technology that can be adopted by companies to store information.