Bitcoin

Bitcoin – An Introduction to Bitcoin

Bitcoins – the currency which has been running waves across the world. And why shouldn’t it? It has been a long time since any revolutionary concept has come about in regards to financial transactions. In this article, we will go bit deeper and see what it is all about.

Bitcoin is known as a cryptocurrency, it is just like any normal currency with two main differences – it is completely digital and independent of any central authority. So no government regulated agency has direct intervention in this. But don’t worry, it is all legal!

Where did the name Bitcoin come from? Well, Bit+coins. Bit is a common word taken from computer lingo (Bits and Bytes). Bitcoins where the first cryptocurrency to come into existence in 2009 and since, their value and usage has grown exponentially. As of year 2016, the total value of money supplied into Bitcoins has crossed $2 Billion.

So, how does this currency work? Bitcoin works on a system of peer-to-peer networks in which each transactions get marked by a unique signature from either side. You don’t receive any physical coins or cash in hand when you are dealing completely in Bitcoins. These are in a crude sense numbers on you digital wallet. To receive these numbers you have to solve math problems – no not like in school, but rather a network of computers mine through large amounts of data to solve these math problems all behind the scenes. This requires heavy amount of computing, but none of this is shown to the average bitcoin user. In fact the average bitcoin user is not likely to know all the technical details of how bitcoins work, in the same fashion that the average user of cash has little knowledge of the technical aspects of the banking system. But you may not be the average user, so lets dig a bit more.

Bitcoin mining is the process of creating Bitcoins. In a general sense, Bitcoins are not created but discovered out. In an comparable fashion consider a currency coin embedded in an ice block. In order to get the coin, one must have to first discover the block and then break the block piece by piece until one reaches the coin. Now replace the coin currency with Bitcoin and the ice block by mathematical functions. These functions are to be solved or decoded in order to reach the coins. Now in technical terms it is a process of running SHA 256 double round hash verification process in order to secure and validate each transaction.

You may be wondering, what’s the competing factor? Doing the above computations requires a good amount of hardware and electricity. In recent past, it was possible to do the bitcoin mining with your computer CPU or high speed video processor card. Since this scenario has changed and much faster systems have come to dominate the industry. So, anything less than that, will consume more electric energy than one would earn from it. The entire Bitcoin network compensates the miners for their efforts directly proportional to the computational power contributed.

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We are a community of Cryptocurrency Enthusiasts, Traders, Investors and Long-term Hodlers, here to educate and bring people together for the betterment of the crypto community.

7 Comments

  1. jaymish

    Bitcoin or cryptocurrency as a whole is a fascinating topic and not as easy to wrap your head around. It takes ages and ages to explain especially to older people. I’m really excited about a digital currency, independent from government control, though they keep trying to stick their oars in through regulation and the delusion that, they can control bitcoin usage. I agree with statements that it is a disruptive technology. I even saw a comment online today, by billionaire Tim Draper saying it is greater than the internet.

    Reply
    • Martins

      I do believe that in no distant time that digital currency would thrive in our society as government and financial institutions would fully accept its usage for transaction.

      It’s true that bitcoin and other cryptocurrency are going through a rough patch now but what I know is that nothing good comes easy. So therefore, I believe that this rough patch would soon elapse and a better day would usher itself in.

      Reply
  2. Martins

    The truth is that when one is looking for the best investment to get into in our current economy, I would strongly recommend going into Cryptocurrency investment with bitcoin being your number one choice.

    It’s true that bitcoin is quite expensive but once you get to invest in it, there is a good chance of making profit in such investment double in no distant time.

    The only problem with cryptocurrency or bitcoin now is that it’s not yet generally accepted by all the world economy and a feasible currency but I believe that in no distant time the future of bitcoin would be more brighter than the way it is now.

    Reply
    • Denis

      Who knows what will happen, Martin.

      Maybe they do end up being accepted by major banks and governments.Less likely, but not impossible.

      If something can benefit the humanity, I am sure somebody will take a deep look into it.

      Cryptocurrencies are good way to get rid of banks who are too greedy, but is it powerful to take them down ?

      Only time will tell.

      Reply
      • Martins

        Personally, I would really love it if the government all over the world would accept bitcoin as a legal tender because I believe it’s going to benefit the citizens more than it might hurt the financial system.

        Yes, it’s true it would affect the original currencies but they can still find a way to coexist and be used interchangeably.

        Reply
  3. mitan143

    Alright. So bitcoin is an independent type of money wherein it works digitally? I’ve been curious for bitcoin and how cryptocurrencies works for a long time and this is my first forum to learn all about bitcoin and then there are other cryptocurrencies so I guess this is great. Thanks for the this informative article.

    Reply
  4. Donna Reilly

    It’s always confused me has bitcoin, I am loving this forum and learning all about it correctly for once. I have come across other forums that don’t explain it in detail like this one does however. I write on Steemit and that’s a cryptocurrency writing platform, it took me a while to understand digital currencies, but these days I am slowly beginning to understand them. Due to this forum. It’s full of useful information.

    Reply

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