BitCoin and other Cryptocurrencies are very much up in the air these days. People want to get in and make money out of this gold rush but don’t really know what exactly is this new technology all about. I have already posted an article about Blockchain technology, now let me educate you on the mighty Bitcoin and how it works.
Digital currencies tend to be decentralized. These are the peer to peer forms of currencies that do not get influenced by the actions of some central or government banks. These currencies usually run the different open source trading platforms. These can be traded against some flat currencies or even as individual funds at some of the leading trading portals. The Blockchain technology has brought about a revolution in the financial and e-commerce services globally. As such, more & more banks are nowadays adopting this highly dynamic technology for processing faster and greatly secure financial transactions.
Digital currencies have really come a long way into the trading scenario since their inception. The global rise happened after the world-level financial crisis during the time of 2008-2009. The concept of bitcoin was introduced by an individual named Satoshi Nakamoto (anonymous). With a myriad of the digital currencies now available in the global financial markets, the legacy of the founders of the bitcoin remains undivided.
Contents
What is Bitcoin?
Bitcoins are forms of electronic or digital currency. These are also known as “cryptocurrencies”. Bitcoins can be understood as a type of digital public form of money that has been created by highly complex mathematical computations. In addition to this, these digital currencies are policed & produced by millions of computer experts known as digital miners.
Essentially, bitcoins are forms of electricity that are converted into long strings of complex codes that are used for representing some sort of monetary value.
How does Bitcoin Work?
Bitcoins are used to represent completely virtual or digital coins that have been designed to serve as “self-contained” in terms of their value. With the help of bitcoins, there is no need of any third party like banks or any other financial institutions for storing or moving the desired amount of money.
Once you are in the ownership of bitcoins, these behave just like the physical forms of gold coins. This implies that bitcoins possess some value and can be used for trading just as if they were some gold stocks in your possession. You can utilize the bitcoins for purchasing goods & services on the online platform, or you can also store them at some secure location in the hope that their value would eventually rise with the passage of time and market conditions.
Bitcoins are usually traded from one individual wallet to another. A digital wallet or Bitcoin wallet serves as a small individual database that can be stored on the computer system of an individual. In addition to this, the digital wallet can also be stored on one’s smartphone, tablet, or at some place in the cloud storage.
For all the personalized intents, bitcoins tend to be resistant from any kind of forgery. Bitcoin tends to be intensive on a computational level to such an extent that it would not be financially worthwhile for the counterfeits for manipulating the given secure system.
The BTC Basics for a Beginner
As a beginner, you can start over with Bitcoin and its applications almost instantly without getting into the complex technical details. After you have installed the Bitcoin wallet successfully in your respective device or system, you will be getting a respective Bitcoin address. You can create additional Bitcoin addresses whenever you might be in need of one. You can share this Bitcoin address with your friends or some other individuals for receiving the desired payments. In a similar manner, if you wish to send over some amount of money to someone, then you must know the respective Bitcoin address of that individual. The overall process of sending or receiving money by using the Bitcoin wallet is as simple as using your email ID. The only exception is that the Bitcoin addresses can be used only once.
Bitcoin Values & Regulations
A single Bitcoin might vary in terms of the overall value on a daily basis. Therefore, you must keep checking the respective value of Bitcoin to observe the changes, if any. There is the presence of over 2 billion dollars worthwhile Bitcoin in the current scenario. You can check real-time Bitcoin value in Coindesk.
The Bitcoin digital currency is complete decentralized and unregulated. There is the absence of any national bank or any kind of national mint. In addition to this, there is not the presence of any depositor insurance coverage as well. The digital currency of Bitcoin is said to be self-contained by itself and highly un-collateralized. This implies that there is no use of any precious metal behind the overall concept of bitcoins. As such, the value of every Bitcoin tends to reside within the digital currency itself.
The bitcoins are stewarded by digital miners. The digital miners are the part of the huge network of individuals who make contributions of their individual computer systems to the network of Bitcoin. The digital miners serve as a group of ledger keepers as well as auditors for the individual Bitcoin transactions.
(Click on the image to get it opened in full resolution)
How are Bitcoins Tracked?
A Bitcoin is used for holding a highly simple file of data ledger known as the Blockchain. Each Blockchain tends to be unique to every user and also to his or her personal Bitcoin wallet.
All the individual Bitcoin transactions get logged and are made available to some public ledger. This helps in the ensuring of their reliability & authenticity and thus, helps in the prevention of any kind of frauds. The overall process of using the Bitcoin also helps in preventing the transactions from getting duplicated as well as from people copying the bitcoins.
Practically, this implies that every Bitcoin transaction seems to be digitally confirmed and is highly anonymous equally. Therefore, though individuals might not be able to see your identity, they might be able to see the Bitcoin wallet history. This serves to be a positive aspect as the public history reflects the transparency and security of the overall system. It also helps in deterring the individuals from making use of bitcoins for any kind of illegal or dubious purposes.
Have a great time using the advanced Bitcoin cryptocurrency for successful trading!
Leave a Reply