What Is Bitcoin?
Bitcoin is a digital currency (cryptocurrency) that was created in 2009. It is a decentralized currency meaning that no government can control how much of it is flowing on the market. The transfer of Bitcoins does not need a third party or intermediaries as individuals can send the digital money via P2P (user-to-user) system.
Satoshi Nakamoto, whose identity is still unknown to the public, created the first ever cryptocurrency in January 2009. The first transfer was made to Hal Finney (creator of reusable proof of work) who received ten bitcoins from Nakamoto while the first transaction took place when Laszlo Hanyecz bought two pizzas using bitcoins.
However, the first to use Bitcoins was Silk Road (on the black market) from 2011 using more than $200 million. At the time, the price of one Bitcoin went from $0.30 to $31.50 in only six months. Bitcoin reached its highest peak in December 2017 when one Bitcoin was valued at $19,666. As of February 2019,17,560,833 Bitcoins are in circulating, and it is expected to reach the cap of its total reserve, which is 21 Million Bitcoins, in 2140.
How Does It Work?
As a decentralized currency, Bitcoin does not have any political institution controlling its flow on the market. The transactions are documented on the blockchain or giant ledger. The blockchain will make sure all the transactions are legal and keep an eye on the whereabouts of the Bitcoins, so they do not get lost. It will also manage the time of production and the making of the Bitcoins.
Why should You Use Bitcoin?
When a person holds Bitcoin, he/she can send or receive any sum of money from any place to any person without the intervention of a third party. Also, with Bitcoins, there are no inflations or imitations of the currency.
The person buying Bitcoins will receive it directly into his Bitcoin wallet from the holder without any interference from outside the transaction. Without any bank or any other institution controlling the transactions, there is no risk of wallet freezing or transaction blocking. The user will be the sole controller of his/her money.
The transactions usually take a few minutes to go through wherever the locations of the two parties; it means that transactions between two people from both extremities of the globe can take the same time as people living in the same town.People can get Bitcoin by exchange with their local banks or from other individuals who already have them.
They can also buy products from different companies, markets, stores, from many countries around the world using Bitcoin money as many vendors accept it now. Anyone can view anyone's transactions' history only by entering his/her Bitcoin's address because all of them are kept on the blockchain.
Trust is essential in every transaction, and with Bitcoin, there are no exceptions. As there are no refunds, buyers or sellers should check whom they are dealing with. Moreover, once the transaction is made, it can't be reversed. So both parties have to check five times if their transaction went through. Users also have to worry about hackers and trackers as the system safety can sometimes be compromised.
The system has experienced many changes over time, so users have to check out for updates usually. Before any transaction, they should check for the reviews or ask questions on the Bitcoin forum if there is any problem. Bitcoin enjoyers have addresses that use anonymity (30 random character names). However, the platform is completely anonymous as users aren’t allowed to connect their addresses to their real names, which may attract people with bad intentions.
Where To Get Bitcoin?
CoinCorner and BTER are some of the places to exchange cash for Bitcoins. Also, the cryptocurrency ATM offers a safe way to get any cryptocurrency. For cryptocurrencies exchange, Coinsquare, Robinhood, Bittylicious, Coinbase, and BitBargain UK are the best places to exchange any cryptocurrency to Bitcoin or any other digital currency safely. Sellers help users trade the cryptocurrencies for cash on LocalBitcoins. When a person wants to sell a product for bitcoins, the best site is Purse.
What Is Bitcoin Mining?
As mentioned above, all the Bitcoin transactions (blocks) are stocked on the blockchain and can be viewed by anyone meaning that there is not a central server.
Bitcoins are produced through a process called "mining." Miners have to access a mining program and have specialized computers with enough power to solve super complicated software algorithms. The algorithms are complex math problems used to validate bitcoin transactionsand the first miner to solve it will put up a block of the transaction on the blockchain. In return for their work, miners will receive a reward in bitcoins.
The rewards vary with time; every four years, the prize becomes half of what it was. At the moment, minors get rewarded 12.5 Bitcoins every 10 minutes.The competition to solve the problems between miners is harsh, and new miners find it hard to find resources necessary to fund the race.
The miners use software to solve those problems based on a Proof of work; it means that the miners don't use calculators to find the solutions but use hardware. The hardware systems have become more sophisticated. The most used now is Application Specific Integrated Circuit. ASICS are only built and used for Bitcoin mining.
Like the central bank controls the issuance of traditional currencies such as the dollar or euro, miners’ job is to produce new bitcoins. They are also in charge of processing and confirming transactions on the Bitcoin blockchain, and to protect the network from getting hacked or stopped. Miners around the world are currently creating bitcoins at the rate of 25 bitcoins/10 minutes.