What is Bitcoin and Why use it? Demystifying the digital currency
Bitcoin, introduced in 2009 as open source software, is a cryptocurrency and a digital payment system. It was published by an unknown individual under the pseudonym Satoshi Nakamoto. Bitcoin is the first ever decentralized currency and its value is mathematically limited to 21 million bitcoin and can never be changed.
How Bitcoin works?
The working of Bitcoin is pretty much similar to that of any mobile wallet. The user needs to install wallet on their computer or mobile device. Once the installation is done, the first bitcoin address would be generated. Now the user can perform a transaction with the bitcoins. All Bitcoin transactions are secured by miners, who help verify various bitcoin transactions through digital signatures.
A digital signature prevents the transaction from being altered by anyone once it has been signed. All transactions are broadcasted between users and usually begin to be validated and confirmed by Bitcoin network within a few minutes.
All the transactions are recorded in a transparent ledger so that the bitcoin wallet can calculate the spendable balance and new transactions can be verified.
Types of Bitcoin wallets
- Online bitcoin wallets are the one that is accessible from the web.
- Software wallets are applications that are downloaded to one’s mobile phone, computer or tablet.
Bitcoin hardware wallets are physical devices specifically designed to secure bitcoin by storing the private keys. - Paper wallets are bitcoin private keys printed from an offline computer that has never been connected to the Internet.
Why use Bitcoin?
Bitcoin is easy to handle as all the money is digital, there are no pre-requisite or arbitrary limits on the amount of bitcoin that one can have. Business can benefit from it as there are no transaction fees for using it and it is free of cost. The setup for the bitcoin is easy and there is no chargeback fee associated with it. Also, you get additional business from the bitcoin economy. In addition to this, Bitcoin can be used in any country of the world without much hassle and your account cannot be frozen.
And the development is on…
Bitcoin is still in its infancy stage. It is volatile because there are limited numbers of coins available in the market and the demand is high. As more and more people turn to use it, its value may become stable. More advanced and more secure features are currently being developed for Bitcoin.
Souraka Ghosh
