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BITCOIN: Everything You Need To Know

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Hey Reader! Today I will be discussing the Decentralized Digital Currency: THE BITCOIN. 98.5% of people in the world haven’t heard of it and today I will be explaining what a bitcoin is, the history of it, the three how’s and lastly should an individual really invest in them or not. Click the button down at the end of the post to listen to the article!

Introduction of Bitcoin:

Bitcoin is a cryptocurrency also known as digital currency which has gained popularity since it has started in 2009.  It does not have any central control like traditional money and is controlled by its users, peer to peer. It is enabled using a technology called Blockchain, which is a new kind of database or list of encrypted digital blocks linked together securely. Bitcoin was the first real-world application of blockchain. Blockchain allows cryptocurrencies like Bitcoin to function and enhances security. In addition, Blockchain can be used for, Smart contracts, Financial services, Video games, Energy trading and the Supply chain. Blockchain was started by a mystery person named Satoshi Nakamoto as an open-source technology. Bitcoin was the first and is the most popular cryptocurrency followed by Ethereum.

History of Bitcoin:

Bitcoin was created in 2009 as the first decentralized currency to run on Blockchain technology. First mentioned in a white paper published by someone with the pen name Satoshi Nakamoto, Bitcoin promised the ability to conduct government-free transactions, relying on digital signatures and digital coins instead of centralized government-issued fiat currencies. All transactions were kept on a ledger that can be publicly accessed, ensuring transparency. Miners, the individuals who volunteer their personal computing power to the network to keep it running, are paid for in Bitcoin and have a say in new protocols that are adapted to the blockchain network.

This allows them to work as a type of central bank, looking out for the best interest of the digital coin as a collective. Bitcoin’s decentralized and blockchain protocols require all nodes to verify a transaction. Since these computers are spread across the globe and run by various individuals, it is considered very difficult to hack or corrupt. This is considered by some to be a secure system and has continuously captured public interest since its creation. There have been times, such as in 2017, when Bitcoin jumped 740% in 5 months, reaching as high as $19,807 before plummeting 69% to $5,967. Despite Bitcoin being well known amongst traders for its price swings, many believe that this leading digital currency is here to stay.

The Three How’s:

How does Bitcoin work?

Bitcoins are basically a computer file that is stored in your phone and computer as a ‘digital wallet’. You can buy bitcoins and send them to others through this wallet. In layman’s terms, this system works like Google pay, Paytm etc. You have money in these apps and can send it to your friends and family or whoever you owe. Every transaction of Bitcoin is recorded in a public list, also known as a blockchain, and not like a bank where there is only a central control of the ledger and an individual cannot see.

Anyone can see these Bitcoin transactions as they are public and traceable. Now you might have a question, if anyone can see these transactions, he or she can easily hack them. The answer is no. When you are sending someone bitcoins the computer system asks all the other systems which have this ledger, It can be you, me or anyone as whoever might have these bitcoins, has this ledger. If even one system says it doesn’t have enough or has a surplus number of bitcoins in the account then the other computers your transaction will fail immediately.  So, if a hacker hacks one computer he or she has to hack all the other computer with this ledger. Hence it’s next to impossible.

How do people get Bitcoins?

There are three ways, people can get Bitcoin.

  • You can buy Bitcoins using apps that support bitcoin transactions.
  • You can sell things and let people pay you with Bitcoins.
  • Or they can be created using a computer.

How are new Bitcoins generated?

In order for the Bitcoin system to work, people can make their computer process transactions for everybodythere are difficult sums generated depending upon the number of people who are mining and the computer are made to work out these sums. If the sum is guessed correctly by the computer and GPU then the person mines a bitcoin as reward.  People set up powerful computers and GPU’s  just to try and get Bitcoins.

This is called mining. The sum difficulty increases when more and more people start to mine them and also to stop too many Bitcoins from being generated. If an individual starts mining now, it might take him/her years before you mined and got a single bitcoin. You could end up spending more money on electricity for your computer and GPU than Bitcoin would be worth.

Apps that might help you to invest in them:

Digital payments companies like PayPal Holdings and a handful of brokerage companies such as Robinhood and Webull have entered the retail market and allow investors to buy Bitcoin, Ethereum, Litecoin and Bitcoin Cash.

Should we really invest in them?

  • The price of cryptocurrencies is volatile
  • You could lose money
  • Not much is known about many of them
  • Some can go bust
  • Others could be scams
  • Some people have reported problems accessing their money due to technical issues

Occasionally one may increase in value and produce a return for investors. So the ball is in your court. Every coin has 2 sides and so bitcoin trading is very profitable but also a risky affair.  

I hope now you’ll have understood what Bitcoin is and found this post interesting as well as knowledgeable! Let me know in the comments. Stay tuned for the upcoming post!

This information is correct and factual to the best of the author’s knowledge, but it is not intended to replace formal, customized advice from a competent professional. This content is not plagiarized, and it is not intended to offend anyone’s feelings.