What is Bitcoin?

History

In the year 2008, the world went through a great financial crash. Banks and government money systems weren’t working, and people asked various questions about the system.

Amid such an explosive atmosphere, on 18th August 2008, a domain name, ‘www.bitcoin.org,’ was registered. Till now, no one could find out who registered the domain name. After two weeks, an individual (or a group of people) named Satoshi Nakamoto published a 9-page document. Nakamoto introduced ‘bitcoin,’ a peer-to-peer electronic cash system in that document.

No one paid heed to Nakamoto since people were dealing with the unprecedented crash in the stock marketCrash In The Stock MarketA stock market crash occurs when stock prices in all sectors begin to fall rapidly. It is often the result of global factors such as war, scam, or the collapse of a certain industry. In such a crash, panic acts as a catalyst.read more.

Moreover, people didn’t think that kind of system would scale.

A few months later, on 3rd January 2009, the first-ever 50 bitcoins were released. And that was the beginning of a new form of money, the money that could change the way we look at the world’s economy.

How do Bitcoins work?

The best part is there’s no third party in this system. Every transaction happens only between users, without an intermediary.

The reward that is given for using bitcoins is called mining. In February 2015, it was found that around 100,000 businesses approved and accepted these as the mode of payment.

You can use it as an investment other than using bitcoin instead of services, products, and currencies.

As per the research of Cambridge University in 2017, around 2.9 to 5.8 million users of bitcoins were reported.

How do you buy a bitcoin?

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  • First step: To be able to purchase these. First, you need to install a “virtual wallet” onto your smart device – your mobile phone or your laptop. This wallet is the software that helps you track all of your transactions and balance.Second step: To buy it, you should be ready to spend real money. You can deposit the money through an online payment gateway. Or you can transfer it directly from the bank to the account of a third-party website that connects bitcoin buyers and sellers.Third step: Once the payment is made, you will be able to order from the website. Treat it just like buying stocks. The way you would buy stocks by transferring the required amount, you would need to buy bitcoins similarly. You would use an exchange like “bitstamp” for placing your order.Fourth step: This is not the next step but is an alternative way. If you feel that the above steps are cumbersome, you may use a third-party host like “bitinstant,” which cuts the effort in half and sends bitcoins directly into your “virtual wallet.”

Practical uses 

From the above, bitcoins may seem an alien concept. But it is not. It has many practical uses and applications, and it can be used beyond just monetary transactions. It will help the individual as well as society –

These practical uses can be implemented if most of the population realizes the value of bitcoin technology and starts to embrace its magnificence.

Advantages

  • Hidden identity: Bitcoin technology is security against cyber-theft is the ability to keep oneself under camouflage. With this technology, you would be able to keep your identity hidden. Since transactions or accounts have nothing to do with real-world identities, one can only analyze the flow of the transaction. It wouldn’t be possible to find the real-world identities of anybody. You would receive or send bitcoins to addresses that are just the chains of 30 characters.No gatekeepers: To use the banking system, you have many gatekeepers who would prevent you from making the transaction. There would be no gatekeepers, and anybody with the open software could receive or send bitcoins. Under this technology, you would have to take responsibility on your own.More secured: Its almost impossible to hack your account under bitcoin. Its funds are securely locked under a cryptography system. If you’re the owner of a private key, only you can send crypto-currency i.e. bitcoins. Since it is made by using solid cryptography and huge numbers, it’s impossible to hack the address.Swift and global: It is super fast. Once the transaction is initiated, it is propagated instantly to the global network; and the transaction would be confirmed within a couple of minutes. And since it is done with a wide global network, the owner’s physical location doesn’t count. Using this technology, you can send bitcoins to your relatives nearby or a friend abroad.

Disadvantages

  • The only possible disadvantage is that every transaction is irreversible. No one can reverse this transaction. Once the transaction is initiated, it’s done.In the usual banking system, a safety net is there in case of critical transactions. Under bitcoin technology, there’s no safety net. If you send your funds to a scammer, your scammer will have the money.That’s why it’s important to first confirm to whom you’re sending your funds. You need to be more responsible in sending funds under bitcoin.

This has been a guide to Bitcoin. Here we discuss how it works, its practical uses, and the advantages and disadvantages of Bitcoin Technology. To learn more about Investments, you may refer to the following articles –

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