Bitcoin – Let’s Talk A Little More About the Digital Gold

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A lot of people, even doctors and engineers are still confused and don’t have a good idea of Bitcoin. Though, they do know that it is difficult to buy Bitcoin these days as it can make people rich. They do know that people have made billions after intelligently investing in this digital coin at the right time. That’s their limited knowledge and then comes a blank notebook that can easily accommodate and sustain a lot more awareness and knowledge about Blockchain, Bitcoin and cryptocurrency.

What is Bitcoin?

Bitcoin is a cryptocurrency, a virtual currency. This is the very first decentralized virtual currency that can be used in a peer-to-peer payment system anytime and from anywhere. If you have forgotten your wallet at home and there is nothing in your pocket to pay your recent purchase then you need not worry. If you have Bitcoin, you are already rescued. The seller will love to exchange goods for Bitcoin. There are several physical stores and online stores accepting this cryptocurrency. It is a decentralized digital currency and that’s why no government, bank or company can control it.

We can break Bitcoin into two components – Bitcoin token and Bitcoin protocol. The token is a piece of code representing ownership of a digital concept. The protocol, on the other hand, is the distributed network maintaining a ledger of balances of the token.

Who Created Bitcoin?

It all started with writing a piece of code in 2007. In November 2008, Satoshi Nakamoto published the whitepaper titled ‘Bitcoin: A Peer-To-Peer Electronic Cash System’. He or she or they experimented with Bitcoin’s software and revealed it to others in January 2009. The first block of Bitcoin was mined on January 3 which marked the beginning of Bitcoin. Nakamoto fixed some minor bugs and released the updated 0.1 version of the software on Sourceforge. Nakamoto created Bitcoin.org to collaborate with other developers. However, Satoshi Nakamoto tucked his/her/their personal information away from other developers. Later in December 2010, this mystery figure behind Bitcoin ceased all involvement in the project and handed the leading position to Gavin Andresen. On April 23rd, 2011 a software developer Mike Hearn received a mail from Satoshi. ‘I’ve moved on to other things. It’s in good hands with Gavin and everyone.’ – this is what he/she/they wrote.

The creator of Bitcoin is still not unmasked. So, no one knows how Satoshi Nakamoto really looks like.

How Is Bitcoin Different From Traditional Currencies?

Bitcoin is a digital currency that is used to make payments electronically if all involved parties agree. We use Dollars, Yen or Euros for the same. What’s the difference?

Here Is How This Cryptocurrency Different From Fiat Digital Currency:

It Is Decentralized

It is decentralized which means Bitcoin network is nobody’s control. There is a group of volunteer coders maintaining Bitcoin and it is being run by a global open network of dedicated computers. That’s why it lures individuals and groups who do not appreciate the control of government bodies over money. Bitcoin’s ingenious combination of economic incentives and cryptography also solves the ‘double spending problem’ associated with electronic currencies.

It Has Limited Supply

The supply of fiat currencies such as Yen, Dollars, Euros etc is unlimited as these are printed and issued by central banks. And, these banks can also manipulate the value of a currency relative to other currencies. Who will bear the value manipulated fiat currency? You, the currency holder. In the case of Bitcoin, the underlying algorithm strictly controls the supply of the coin. Every hour, there is a small number of new Bitcoins tickling out and this will end when 21 million will be reached. The supply remains same and hence its value increases with increasing demand.

Pseudonymity

In the case of traditional electronic payments, the sender is usually identified. This is done for anti-money laundering, verification and other legislations. However, there is semi-anonymity in the case of Bitcoin. The identity of the sender does not matter for the protocol. It simply checks all the previous transactions to make sure that user has the necessary Bitcoin and authority to send Bitcoin.

In the case of Bitcoin, the currency holder is identified by wallet address. This allows the system to track transactions. However, law enforcements have made it necessary for exchanges to perform identity checks before they allow their customers to buy or sell Bitcoin. As the network is transparent, the progress of every single transaction is visible. That’s why this digital gold is not ideal for criminals.

It is Immutable

A transaction performed in Bitcoin cannot be reversed. Once the transaction is recorded on the network, it is impossible to modify if one hour has been passed. So, a transaction performed in Bitcoin cannot be tempered.

Divisibility

Satoshi is the smallest unit of this cryptocurrency.

1 Satoshi = 0.00000001

Microtransactions are not possible with electronic money. However, one can perform microtransaction with Satoshi.

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