What is Bitcoin (A basic approach to Cryptocurrency)

What is Bitcoin

Bitcoin is virtual money that can also be used as a legal tender to exchange goods and services via the internet. It is a cryptocurrency that cannot be seen or touched. It is entirely electronic and is today’s most valuable cryptocurrency. In the past, money was purely a physical item. However, the advent of bitcoin cryptocurrency revolutionized the world’s economy. Bitcoin has replaced paper money in many instances and is still growing strong.

Historically, Bitcoins were first used in 2009 by Japanese – Satoshi Nakamoto. We have heard stories of how he used his coin to buy a peanut. However, the full identity of the creator of bitcoins and the initial technology is still a subject of immense debate.

Today, Bitcoins have risen in value and acceptability. It cannot be controlled by any central body, Government, or agency. Bitcoins offer low transaction fees compared to fiat or other online payment platforms.

To a layman, Bitcoins can be described as online money to buy and sell services and products on the internet. Don’t be moved by the pictures of bitcoins you see. They are merely physical representations and will have no value without the blockchain codes embedded in them. 

How does Bitcoin work

The technology behind Bitcoin is the Blockchain. There are strings of computer files saved in digital wallets. These wallets are apps on computers and mobile phones. They are virtual pus and must be protected like a physical wallet. 

When exchanging goods and services, you make payments by sending your bitcoins to your clients. You transmit or receive bitcoins through a unique wallet ID address assigned to every wallet in the Blockchain. The Blockchain serves as a public list where all the bitcoins transactions are recorded. With the Blockchain, users of bitcoins can track transactions and decipher the flow of the currency. 

How to get Bitcoin

Just like other currencies, bitcoins are earned by offering goods and services. Bitcoins are also made by trading them in the financial market due to the wide acceptability and the swift rise in the currency value. People now buy bitcoins, keep them for some time and then use it when the value has increased. Like currencies such as dollars, gold, pounds, etc., people trade forex in the financial market and earn more when the currency’s value rises. 

 Besides, you can get bitcoin by buying from people using real currency. In this case, the amount paid is based on the current exchange rate.

 Lastly, people can get bitcoin by mining. Bitcoins mining is carried out on the computer, and a vast majority of bitcoins are created through this method. But what’s the buzz about this Bitcoins mining? It is merely the creation of new bitcoins through computer algorithms. 

 Bitcoin mining: Procedures involved in creating new Bitcoins 

The bitcoins system is decentralized, and every hand is always on deck for its value to increase. A single user can run algorithms that are beneficial for everyone. The computers undertake complex numerical operations, and this gives rise to new Bitcoins for the owner. This robust set up of computer algorithms that give rise to new bitcoins in circulation is known as bitcoins mining. 

 Over the last decade, bitcoins value has increased. The time required to create one bitcoin has also increased because the algorithms and numerical operations are becoming more complex. Nowadays, it would take years for people to make one bitcoin. Bitcoins mining requires powerful computers and steady electric power for long periods. 

Aside from the complex mathematical computations, Bitcoin mining can be carried out with mining rigs. Mining rigs are hardware tokens for the mining of bitcoins. There are various types of mining rigs. Some are integrated circuits, while others are Graphic units used to create bitcoins more quickly. 

Why are Bitcoins increasing in value?

Money, Gold, and Diamond are valuable because people are ready to exchange them for goods. Bitcoins increase in value in the same vein because the number of people who accept it as a medium of exchange increases. Ten years ago, only a few people were willing to take Bitcoins for exchange. Today, millions of people use bitcoins for daily transactions. 

Why is the number of Bitcoin users increasing?

Many people prefer to use bitcoins for transactions because it operates on a decentralized system in which neither the banks nor Government are in control. Anonymous spending is possible with bitcoins because no one will know your account number unless you tell them. Records of transactions are publicly held by Blockchain, making it impossible for people to create fake bitcoins or steal from others. 

 However, there are several incidences of bitcoins theft from some bitcoins investment websites. There is a possibility of losing your Bitcoins wallet to hackers. More so, the value of bitcoins is not always stable. It rises and falls intermittently, and many people are skeptical about investing in their real money. 

Bitcoin Investment

Today, several people believe that Bitcoin, alongside other cryptocurrencies, is the future of the world’s economy. Many endorsers of bitcoins believe that Bitcoins are a fast, cheap, and easy medium of exchange. No bank controls Bitcoin. The value of Bitcoins against the dollars has been increasing steadily, and this is why many people are interested in bitcoins investment. Just like other currencies and valuable items, the principle of buying at a low price and selling at a high price is also applicable in Bitcoin. 

Wrapping up

Created in 2009, Bitcoins are virtual money for buying and selling goods and services in cyberspace. Bitcoins are used anonymously, and they are purchased or sold at Bitcoins marketplaces. No one or country owns or has sole control of the bitcoins. People can easily use it for international transactions while paying a meager amount for the trades. It does not require credit cards. Small and medium business owners love Bitcoins; many invest in them while others buy and keep bitcoins, hoping that it will increase in value. Today, bitcoin is one of the most valuable possessions anyone can have.

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