What is Bitcoin? The mystery behind Bitcoin!
You might have heard about Bitcoin or someone talking about Bitcoin, Bitcoin and Bitcoin all time!!
Nowadays, people are crazy for Bitcoins and other cryptocurrencies like – Bitcoin, Ethereum, Ripple, etc.
Everyone want to get Bitcoin and keep in his pocket (e-Wallet).
Before reading through the article, I assure you that you must be pumped and fully charged to have grasped the basic idea of “What the hell Bitcoin is ?” and associated terminologies.
After reading the whole blog you will get great picture about Bitcoin and at-least basics foundation of cryptocurrency.
So, Lets first understand “What is bitcoin ?
From a layman perspective:
- Bitcoin is a digital currency (a-k-a crypto-currency) where encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
- “A Peer-to-Peer Electronic Cash System”
- Worlds first decentralized cryptocurrency in the form of electronic cash.
Bitcoin is a digital network that enables a new payment system and a completely digital money.
It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet.
To better understand the concept of Bitcoin, We must also understand other related terms. Lets try to digest them one-by-one.
A digital asset that make use of cryptography to secure – financial transactions, control creation of new units and transfer of assets.
It is also known as virtual currency or digital currency.
Technically speaking, Bitcoin is combination of several elements – a currency , a payment system, and a collection of algorithms and software tools.
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Top 5 world leading Cryptocurrencies
#1. Bitcoin – BTC
This is the original cryptocurrency and still leading among other cryptocurrencies. Or you say, this is base of all other coins.
#2. Ethereum – ETH
The digital token which prompted the rise of the initial coin offering, comes in second on our list of cryptocurrencies.
#3. Bitcoin Cash – BCH
This is another cryptocurrency as a product of a hard fork.
#4. Ripple – XRP
So, just visualize the Bitcoin as one of cryptocurrency.
Nowadays, cryptocurrencies have been emerged as new medium of financial transaction.
How Bitcoins are exchanged ?
1. Bitcoins are exchanged from peer to peer, one to one network directly without any central authorities.
2. Bitcoins transactions are verified through different cryptocurrency nodes.
3. Transactions are recorded in the distributed ledger – Blockchain.
Bitcoin – Developer perspective! [Developer documentation]
Bitcoin is fully open-source and decentralized. This means that anyone has access to the entire source code at any time.
Any developer in the world can therefore verify exactly how Bitcoin works.
All transactions and bitcoins issued into existence can be transparently consulted in real-time by anyone.
All payments can be made without reliance on a third party and the whole system is protected by heavily
peer-reviewed cryptographic algorithms like those used for online banking.
No organization or individual can control Bitcoin, and the network remains secure even if not all of its users can be trusted.
How does Bitcoin work?
From a user standapoint, Bitcoin is nothing more than a mobile app or computer program that
provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them.
This is how Bitcoin works for most users.
Technical perspective– Behind the scenes – is the concept of Blockchain technology.
Block-chain technology ?
The entire bitcoin network shares a distributed public ledger called “Blockchain”.
This ledger contains every transaction ever processed, allowing a user’s computer to verify the validity of each transaction.
The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses,
allowing all users to have full control over sending bitcoins from their own Bitcoin addresses.
Additionally, anyone can process transactions using the computing power of specialized hardware and earn a reward in bitcoins for this service. This is what called “Mining”.
How does one get bitcoins?
- As payment for goods or services.
- Purchase bitcoins at a Bitcoin exchange.
- Exchange bitcoins with someone near you.
- Earn bitcoins through competitive Mining.