Bitcoin, aka BTC, is a virtual currency that is used and distributed on the internet electronically. That is the reason, and it is also called “internet money”. The fact that distinguishes bitcoin from the real money is that it is not centralized and works on a peer to peer network instead. Therefore, there is no single authority or institution that regulates it.
Also, unlike real money, bitcoin cannot be printed and is not tangible. The amount of bitcoin is minimal and can only be spent based on some specific rules.
Who came up with the idea of bitcoin?
Initially, bitcoin was introduced as software by a programmer under the guidance of Satoshi Nakamoto in 2009. However, there are a number of rumors regarding the actual identity of BTC’s creator.
Later, Nakamoto claimed to be the real creator of bitcoin, who is a 37-year-old male residing in Japan. It is estimated that Satoshi has around one mln bitcoins which has a value of approximately $3.6 bln till September 2017.
How is bitcoin controlled?
The significant advantage of bitcoin is that nobody controls it. Decentralization is its primary feature. For most of people, it is an excellent advantage as it is independent of government, banks, and other financial institutions. So, no single authority can regulate or control the bitcoin transactions. This decentralization feature helps people save a lot of transaction money that they pay while making payment through other sources. The process of payment through bitcoin is totally transparent, and every single transparent is stored in a database known as the blockchain. Essentially, while Bitcoin is not being controlled as a network, it gives its users total control over their finances.
How does bitcoin work?
With a bitcoin, you can only see the amount of money in your bitcoin and the transactions you make. Bitcoin is a network with sharing a public database known as the “blockchain”. The database has a record for all the transactions made by individuals. Such records of the payments are combined into different blocks. The rules are stringent for these transactions. If somebody else tries to change information (be it a single letter), all the following blocks are affected if that happens. This leads to chances of fraud as the data can be easily spotted and changed by anyone, which is why make sure that you do not disclose your information to anybody. You have to install a bitcoin wallet in your mobile or computer, later to which it will generate your first bitcoin address. Make sure you do not disclose with anybody else. You can also have more than just one bitcoin address; everything works as per your need. Only disclose the address to someone you wish to receive a payment from.
This was regarding the transactions. Now let’s talk about some common terms of bitcoin. The first one is a personal wallet. It is like a personal online wallet which consists of the amount present in the bitcoin. It can verify the validity of every transaction. However, the authenticity of every transaction is made by using digital signatures, which is another term of the bitcoin process. It works like a real signature which is required to make any transaction as it normally happens in banks. However, this signature is entirely online. The verification process depends on the trading platform, which takes some time to complete the transaction, and you can know more about cfd trader.
Another important term of bitcoin is the private key. It works as a password for your wallet and transactions. You cannot make any transactions without mentioning the private key.
Some issues related to bitcoin
There’s no doubt that bitcoin makes transactions super easy and prevents corruption. It also does not make you pay extra money for your transactions. However, everything has another side.
Apart from all these pros, bitcoin has some cons too. Being entirely online, there is always a risk of getting your money or bitcoin wallet stolen by the hackers. Another drawback of bitcoin is that it does not provide any refund if you buy something from the seller and the seller is unable to deliver it to you.
You might also have to bear a lot of losses because the value of bitcoin keeps changing as it is highly volatile.