What is Bitcoin? A Step-By-Step Guide For Beginners - Divyam Smart Support

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Wednesday, 3 January 2018

What is Bitcoin? A Step-By-Step Guide For Beginners

Human Civilization in the twentieth century faced information explosion and as a result, the digital era began. This era gave birth to technological revolution and we all started living in a virtual world. Being virtual means that you will have a feeling of one or more thing but you can't touch it physically. It affected directly on every country economy.

In 2009, a new currency was introduced which is called "Bitcoin". Within few years, bitcoins became the world's most valued currency. Bitcoin was priced at Rs.6 and today while writing this article a bitcoin is worth Rs.953040. So, let us know more about Bitcoin, What bitcoin is? and how it works?

What is bitcoin?
Image Credit: Bitcoin Org


What is Bitcoin?

Different countries have different currencies. Just like Indian rupee and American Dollar, Bitcoin is also a currency, but this currency is slightly different from other types of currency. Bitcoin is a digital currency or Cryptocurrency which is based on an open-source-software.

We can not see or touch it. It is kept in digital mode, ie., in a digital wallet. This currency is based on computer networking only.

In other words, Bitcoin currency is traded through a fixed computer network.

You can use this currency for online purchases and other transactions.

The most special thing about this currency is, bitcoin is an open-source-technology or an independent currency and it's not controlled by any person, organization or country.

This means that this currency has no owner.

This digital currency operates automatically without any institution controlling it.

How Bitcoin Works?

If we have to send money to someone, we have to send it via bank transfer and the reserve bank of India and the Indian government controls the Indian rupee. But, bitcoin is a decentralized currency which is not controlled by any government or bank.

Bitcoin technology is a technology based on "Peer to Peer" network, due to which you can transact without any bank or authority directly to any person.

Just as there is a bank account, there is digital bitcoin wallet for the transaction in bitcoin. Just as there is a bank account number, you also get an alphanumeric character of 24-27 characters.

All transaction in the Bitcoin systems are encrypted and the system is safe.

Bitcoin Blockchain and Mining

If we use Physical currency, then we follow all the bank's process, then we can do the transaction where we can send money to others account and we get a statement of the same. Just like that, all transaction made with bitcoin are recorded in public digital account called Bitcoin Blockchain.

All type of Bitcoin transaction is recorded in public Blockchain and the process to keep this blockchain updated and safe is called Bitcoin mining.

The trained and experienced people from software world is called Bitcoin Miners.

In this way, Bitcoin works automatically without any authority controlling it.

Who Invented Bitcoin?

Bitcoin was invented by "Satoshi kamamoto", a programmer(software engineer) on January 3,2009.

The purpose of making Bitcoin, in the beginning, was not to change it as a currency but to prove that the transactions of the money were also possible without any bank or third party. But, later it took the form of "Digital Currency".

Importance and Uses Of Bitcoin

Bitcoin is the fastest, safe and cheap way to make any type of transaction. Mostly it is used to send money from one country to another. All transactions are encrypted so this is a safe way of transaction.

How Price Of Bitcoin Changes?

Today, bitcoin is used for different purposes. Anyone can buy or sell bitcoin online. Like other currencies, the price of bitcoin also fluctuates. The number of total bitcoins in the world is predetermined and hence it is not controlled by any organization, so there are lots of ups and down in the price of bitcoin.


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