Bitcoin and Cryptocurrencies Gaining Ground
Technology is leading the world and it has gone digital today. Transactions which required cash payments have also gone digital. To add a jewel in the tiara of technology, a digital currency, called Bitcoin, is gaining grounds. This term, though new to many, is getting popular among the business players.
1. What is a Bitcoin
A Bitcoin which is a decentralised digital currency can be used to buy, sell and exchange goods or services without a central administration or bank as a mediator. It has become one of the well-known virtual currencies of today. Its value is rising dramatically and is also used as an electronic payment system. It is used in various ways, some holders take it up as an investment and others purchase Bitcoin and wait for its value to rise, so that they can make money by selling it whereas some others use or accept payments as currency.
2. Transactions with Bitcoin
Bitcoin-Bitcoin transactions are quite different. They are made by digitally exchanging, anonymous, heavily encrypted hash codes across a peer-to-peer (P2P) network. The P2P network is the one that monitors and verifies the transfer of bitcoin between users. A program called digital wallet, stores the bitcoin of the user. This wallet holds each address the user sends and receives bitcoin from. This wallet also holds a private key that is known only to the user.
3. Bitcoin Works with Blockchain
Blockchain can be said to be a public ledger which is used as a digital system for recording transactions and the related data in multiple places at one time. There are units in Blockchain, called blocks that contain data about every transaction. It includes the date, time, value, buyer and seller and even an identifying code for each exchange. It is a decentralised technology and is not controlled by any single organisation. It is so designed that it is not possible to forge or hack the system. Hence it is secure and immutable. Every computer that is included in a blockchain network holds a copy of the ledger. If any change is done in any one block then the same change has to be done on all the blocks that are connected to this blockchain and in this distributed ledger. In addition to this, there are identifying codes that make it impossible for fraudulent attempts.
Entries of data are strung together in a chronological order, creating a digital chain of blocks. As a block is added to the blockchain, it gets accessible to anyone who wishes to view it. It functions as a public ledger of cryptocurrency transactions. If a transaction block has to be added to the Bitcoin Blockchain, it should be verified by the majority of all Bitcoin holders. There are unique codes that are used to recognize users’ wallets and these transactions must confirm the right encryption pattern. This pattern or the codes are long and random numbers which makes it exceedingly difficult to create deceptively. Hence it is not easy to edit any block, therefore making Bitcoin trustworthy and secure.
It is with this Blockchain technology that Bitcoin works with, hence there is no question of any deceit or unfair attempts. Each and every transaction of every Bitcoin that’s ever been made exists on a public ledger of Blockchain and is accessible to everyone. This makes the transactions hard to reverse and difficult to fake. Bitcoin Cryptocurrency has no centralization, hence there’s nothing to assure their value except the proof baked in the heart of the system, in the form of Blockchain technology.
One will need a Bitcoin wallet to store it and this is of two types, Hot wallet and Cold wallet. A hot wallet or an online wallet is held by an exchange or a provider in the cloud but a cold wallet is not connected to the Internet and is an offline device.
4. Know About Cryptocurrency
Cryptocurrency is decentralised digital money with more than 19,000 different cryptocurrencies in circulation. It is based on Blockchain technology. It is an encrypted and decentralised medium of exchange. There is no central authority to handle and uphold the values of Cryptocurrency. Bitcoin and Ethereum are the trendiest forms of Cryptocurrencies and Bitcoin is the first Cryptocurrency of this digital world.
One needs a Hot wallet to make a payment in cryptocurrency. A hot wallet is a software program that interacts with the blockchain and allows users to send and receive their stored cryptocurrency. Crypto Exchanges facilitate cryptocurrencies and offer the ability to trade some of the most popular cryptocurrencies.
5. Bitcoin and Cryptocurrencies Gaining Ground
Bitcoin is a digitalised cryptocurrency and the world’s first successful decentralised cryptocurrency and payment system. In cryptocurrency, the transactions are secured and verified using cryptography which is a scientific practice of encoding and decoding data. A ledger technology called Blockchain stores these transactions on computers which are distributed all over the world.
This digital currency operates without any central control or the supervision of banks or governments. Rather it works on peer-to-peer software and cryptography. Each Bitcoin is divided into milli, a thousandth part of a Bitcoin and satoshi, a hundred millionth of a Bitcoin, that means each Bitcoin is very large and is subdivided by eight decimal places. When we consider Bitcoin as a market asset, it is represented by the ticker symbol BTC. It is used for payments and can be divided into smaller units known as “satoshis” (up to 8 decimal places).
Just like any other asset, Bitcoin can also be exchanged online, for cash, on a number of cryptocurrency exchanges and the transactions can also be carried on in person or over any communications platform. This makes it feasible for even small businesses to accept Bitcoin. There is no proper official mechanism that can convert Bitcoin into another currency.
This is a limited supply of digital cryptocurrency. There are only 21 million coins in the world, out of which 18.77 million have already been mined, that means, 83% of all the bitcoin has already been circulated. Hence, Bitcoin is scarce and controls the inflation that might occur if there was an unlimited supply of the cryptocurrency.