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Know more about Bitcoin

20 December, 2020 Business

Know more about Bitcoin

 

In a first, a group of people called Satoshi Nakamoto(which is a pseudonym) created the first successful cryptocurrency, bitcoin, in 2009. It is a type of digital currency that uses a decentralized peer-to-peer technology, thereby facilitating payments over the web. In layman's terms, Bitcoin is like an online version of cash money. Also, since it's digital, it cannot be printed, and the amount of bitcoin is not vast; it is limited.

 

According to the market capitalization and data stored on bitcoin's blockchain network, it is the largest cryptocurrency in the market at the moment. The most aspect of this cryptocurrency is that the design of it is public, which implies that no particular individual owns or controls its transactions. Thus, the transactions are extremely transparent as each and every record of the transaction is in blockchain, allowing users to control their finance. Blockchain is a vastly distributed public ledger.

 

Thus, everyone can take part, making it open source. Bitcoin has various unique characteristics that any existing payment facilities offer. The three important features it offers are as follows:

  1. Universal Payments
  2. Cheap Processing Fees
  3. Swift peer-to-peer Transactions

Let us now dig deeper into the history of bitcoin.

 

History:

Satoshi Nakamoto registered "www.bitcoin.org" as the domain name on 18th August 2008. Today, the identity of the person who registered this domain is "Guard Protected," meaning not in the public interest.

 

On 31st October 2008, Satoshi Nakamoto made an announcement on The Cryptography Mailing list at metzdowd.com regarding bitcoin. Satoshi said they were in the process of making an electronic payment system that was 100% peer-to-peer without the involvement of any third party. Thus, the whitepaper that is Bitcoin: A Peer-to-Peer Electronic Cash System has the principle functioning of the current operation of the famous crypto.

 

"Genesis Block" was the first bitcoin block that was mined on 3rd January of 2009. It was also said as "block 0". Right after five days of block 0, the first Bitcoin software was announced on The Cryptography Mailing list. On the next day, 9th January 2009, Block 1 was mined, and bitcoin mining commenced ardently.

 

How Bitcoin works?

Every bitcoin is a collection of nodes which is stored in a "digital wallet." In layman's terms, it is a computer file. These files can be transferred from one user to another via the wallet. To prevent users from making copies of these files and transferring them again, blockchain is used. Blockchain stores the details of every transaction that you make through any website with this login page.

 

There are three ways to get bitcoins:

  1. One can buy Bitcoins using fiat currency.
  2. One can accept payment in terms of bitcoin.
  3. One can create using a computer, preferably a powerful one.

The process of releasing bitcoins into the open-source for circulation is known as "Bitcoin Mining." After solving complex mathematical problems to verify transaction blocks, these blocks are added to the blockchain. People solving these algorithms are called miners. Miners are rewarded with 6.25 Bitcoin for every block as of November 2020.

 

Benefits of Bitcoins:

Let us list a few of the benefits that bitcoin offers:

  • Discreet

The bitcoin transactions are discreet and stay confidential. Thus, until a user willingly informs about his bitcoin-based transactions, the records are never linked to his name, which is almost like traditional payment systems like cash transactions.

  • Focus on Peer-to-Peer

This solely means that a person can use the bitcoin payment system to send and receive payments without getting any approval from a third party or any other authority.

  • Autonomy of User

The users of bitcoin get more autonomy over their money than what they got in fiat currencies. They can control their finances without the involvement of any intermediary authority such as the government or bank.

  • No Banking Fees

The biggest advantage that bitcoin offers its users is that it does not charge them for the maker and taker fees while other cryptos do. This thus means that there is no requirement of maintaining a minimum account balance or paying overdraft charges.

  • Accessibility

Theoretically, bitcoin is actually available to people who do not have access to traditional banking systems or any other mode of payment. This is because the users can control the transaction via a computer or even a smartphone.

 

These were a few benefits that bitcoins offer. Though it does not have a legal tender, it has not stopped its popularity. Thus, it has led to the launch of many other cryptocurrencies as well.

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