Ever wondered what bitcoins are, how they work, and why they are so popular? It’s actually not so hard to understand exactly what this cryptocurrency is and how it works. Take a look at this quick guide.
What are bitcoins?
Have you ever heard of cryptocurrency? Bitcoin is the most famous of the current cryptocurrencies. Some of the other cryptocurrencies include Litecoin, Bitcoin Cash, Ethereum, Stellar, Ripple, NEO, and Cardano.
Cryptocurrency is a virtual currency whose security is guaranteed electronically through cryptography, making it practically impossible to either duplicate or counterfeit it. Cryptocurrencies work through distributed networks and Crypto Exchanges secured by the use of blockchain technology.
Satoshi Nakamoto originally designed Bitcoin in 2008, but, in 2010, he handed Bitcoin to the hands of the community of developers. It has since become the most successful cryptocurrency and has gained trust even with central authorities.
What is blockchain?
Blockchain is the technology that guarantees safety in the exchange of bitcoins over networks in making transactions. Blockchain is a distributed ledger of accounts that keeps track of all the transactions done through bitcoins. It timestamps all the trades for security and generally verified by bitcoin miners.
Bitcoin miners employ the use of specialized computers to solve complex puzzles. Every time a bitcoin changes hands, a complex problem is generated and floated to the miners. They compete to solve the generated puzzle. Once the mystery puzzle is solved, the miner who solved it is awarded some Bitcoins. The following also happens;
- The bitcoins transaction is authenticated, and the recipient of the bitcoins is now able to receive them to their wallet.
- A block becomes aggregated to the chain of the distributed ledger that ensures the transparency and safety of the transaction.
Bitcoin works in the same principle as the way banks control financial transactions. In this model, instead of banks, blockchain technology is employed. This technology ensures that a bitcoin transacts only once, preventing double-spending.
How do I get bitcoins?
Bitcoins can be purchased from many sources online. One can buy them through an exchange service or brokerage firm, which ensures that you can purchase bitcoins through your credit card or bank transfer.
The other way to get bitcoins is to accept them as a form of payment in exchange for services rendered or products sold. There is a limit of 21 million possible bitcoins today, and no further production will ever take place, hence their value.
The significant advantage of the bitcoin is the guaranteed anonymity of its user. Bitcoins design has the blockchain technology publicly maintaining relevant data on its ledger about the transactions without revealing the parties involved. Instead, Bitcoin uses false names and numerical codes to identify its users.
Bitcoin cryptocurrency also has the advantage of being more liquid as compared to other currencies.
Bitcoin transactions will attract lower transactional fees as compared to other currencies, too.
Bitcoins are also widely accepted worldwide, and international operations conducted more conveniently and faster using cryptocurrency than other currencies.
Author Bio :- Hitesh is a digital marketing strategist and entrepreneur with more than 15 years of experience in digital marketing, start-ups, branding, and customer acquisition strategies. Hitesh is the CEO and Founder of Reposition Group, which specialises in digital growth strategies for companies in the cryptocurrency market such as Bitamp.com.