What is Bitcoin?
Bitcoin is the first decentralised digital currency which can be sent through the internet with much ease. It was developed by Satoshi Nakamoto in the year 2008 to make payments with electronic system. The purpose of this idea was to make sure that currency is independent of the Central authority which can be instantly transferred electronically at low transaction cost.
How is Bitcoin generated?
Bitcoins are not physically printed by the Central bank if so it may result in devaluation of the currency. Instead a community of people are involved creating the money digitally which is known as mining. These are mined using computing power in a distributed network. It also processes transactions made with the virtual currency and hence making it its own payment network.
What is Bitcoin based on?
Bitcoin is based on Mathematical algorithms. Unlike the traditional method people around the world can use software that provides with the Mathematical formula to produce Bitcoins. They exist as records on a distributed ledger called the block chain, copies of which are shared by a volunteer network of connected computers. To own a bitcoin simply means having the ability to transfer control of it to someone else by creating a record of the transfer in the block chain. They are based on certain algorithms like ECSDA (Elliptic curve Digital signature Algorithm) which uses elliptical curves to “sign” data in such a way that third parties can verify the authenticity of the signature while the signer retains the exclusive ability to create the signature. With bitcoin, the data that is signed is the transaction that transfers ownership. Some of the commonly used Mining apps are BFGMiner, CGMiner, Asteroid, MacMiner, etc. The world’s leading provider of Bitcoin software is Blockchain. It is a secure, open platform which can be used by anyone. It provides services like ewallet, API’s and it can also be used for business analysis and research purpose.
Transactions are fast, secure and global. Bitcoins enable people to maintain their records without the fear against breach in Data privacy. The main benefit is that people can create ‘N’ number of bitcoin wallets. It is not mandatory for the people to show their identities during business transactions thereby the users can maintain their finances private. Whereas in a Bank the Identity has to be revealed by the user during any kind of transaction.
Bitcoin does not result in Inflation. It is different from other currencies. Inflation occurs when the total amount of cash in the system increases. It is heavily dependent on the country’s demand and supply but in the case of Bitcoins there is no possibility of Inflation since bitcoins are scarce and easily interchangeable.
Below is the average Bitcoin price in the US on a yearly basis. As you can see the variations in the currency is much less with Bitcoin currency than US dollars.
Countries where Bitcoin is used?
Countries like US,UK, European countries have implemented Bitcoin currency. Major countries that do use Bitcoin are Bangladesh, India, China, Vietnam, Thailand, Sweden.