Bitcoin - A cryptocurrency
The currency can be a Metal currency (coins), Paper currency (bank notes), Plastic currency (debit cards) or Cryptocurrency.
Bitcoin is a Cryptocurreny. Other cryptocurrencies are Ethereum, Ripple, Litecoin etc. (collectively called Altcoin).
What is a Cryptocurrency? It is a digital money system designed to make monetary transactions secure by use of Cryptography.
It is process of converting legible information into an almost uncrackable code, to track the transactions. Such currencies are
created and stored electronically in the block-chain.
Features of cryptocurrency including Bitcoin:
1) It is not backed by underlying assets. Hence it has no instrinsic value.
2) It has no physical form and exists in network only.
3) It is not issued or regulated by a Monetary Authority & network is decentralized.
4) It can be used like a paper currency to buy goods and services.
Why cryptocurrency : Creation of a currency not controlled by govt. or businesses, that a user could trade globally with no cost and
without having to reveal his/her identity. Origin of Bitcoin : In Aug 2008, domain name “bitcoin.org” was registered. The word bitcoin
was defined in a white paper published on 31 Oct 2008 by Satoshi Nakamoto (an anonymous person or persons). In Jan 2009, the Bitcoin
network started functioning when Satoshi Nakamoto mined first block. The receiver of first Bitcoin was a Hal Finney. Features of
Bitcoin:
How it is used? The bitcoin network is a peer-to-peer network and the payments and receipts happen directly without any
intermediary. In case of other currencies an intermediary like a bank also participates.
Verification of transactions: The transactions in bitcoin are verified by the bitcoin network computers and then recorded in a
public ledger, called Blockchain.
What is blockchain? Blockchain is a distributed database. It enables independent verification of chain of ownership of all Bitcoin
transactions. Whenever a Bitcoin transaction takes place, its detail is broadcast over the Bitcoin network. Each network computer stores its
own copy of the blockchain. Every peer has a record of complete history of all transactions and balance of every account, in the block
chain.
Ownership: Bitcoins are registered as bitcoin address in the block chain. For spending bitcoin money, owner needs corresponding private
key and sign the transaction digitally. Volume of bitcoin: As per Bitcoin code, there is a limit to issue only 21 million Bitcoins. According to
current estimate, the bitcoin mining will last till the year 2140 AD only. Mining and creation of Bitcoin: The process of creating bitcoins is
called mining. Miners are members of public with skills to handle complex computers. They have a financial incentive (to earn Bitcoins) for
helping to validate and timestamp, the transactions The miners use the high-powered computer software, to solve complex mathematical
algorithms (puzzle) and verify them, to make the Blockchain more secure. The level of difficulty of the puzzle is very high. It takes lot of
time & effort to solve a puzzle. The miners compete to solve these problems and the first person who submits the solution, is the winner
and receives a reward of a specific number of bitcoins. Where to get bitcoins? Bitcoins are available from a) Bitcoin exchanges, b)
Purchase from other users and c) By mining. Bitcoin Units: The unit is Bitcoin represented as BTC and XBT. Small amounts of bitcoin are
millibitcoin (mBTC) and satoshi. The smallest amount within bitcoin system is 0.00000001. A millibitcoin is equal to 0.001 bitcoin.
Properties of Bitcoin transactions:
1) Transaction is irreversible when it is confirmed within Bitcoin network.
2) Bitcoins are received on an address (it is randomly seeming chain of around 30 characters). Transactions and accounts are not
connected to real-world identies.
3) Transactions are on global basis. These are confirmed within few minutes
4) Funds are locked in a public key cryptography system. As a result, the transactions are secure.
5) Anyone can install the software and can start receiving or sending Bitcoins. No permissions are required.
The currency can be a Metal currency (coins), Paper currency (bank notes), Plastic currency (debit cards) or Cryptocurrency.
Bitcoin is a Cryptocurreny. Other cryptocurrencies are Ethereum, Ripple, Litecoin etc. (collectively called Altcoin).
What is a Cryptocurrency? It is a digital money system designed to make monetary transactions secure by use of Cryptography.
It is process of converting legible information into an almost uncrackable code, to track the transactions. Such currencies are
created and stored electronically in the block-chain.
Features of cryptocurrency including Bitcoin:
1) It is not backed by underlying assets. Hence it has no instrinsic value.
2) It has no physical form and exists in network only.
3) It is not issued or regulated by a Monetary Authority & network is decentralized.
4) It can be used like a paper currency to buy goods and services.
Why cryptocurrency : Creation of a currency not controlled by govt. or businesses, that a user could trade globally with no cost and
without having to reveal his/her identity. Origin of Bitcoin : In Aug 2008, domain name “bitcoin.org” was registered. The word bitcoin
was defined in a white paper published on 31 Oct 2008 by Satoshi Nakamoto (an anonymous person or persons). In Jan 2009, the Bitcoin
network started functioning when Satoshi Nakamoto mined first block. The receiver of first Bitcoin was a Hal Finney. Features of
Bitcoin:
How it is used? The bitcoin network is a peer-to-peer network and the payments and receipts happen directly without any
intermediary. In case of other currencies an intermediary like a bank also participates.
Verification of transactions: The transactions in bitcoin are verified by the bitcoin network computers and then recorded in a
public ledger, called Blockchain.
What is blockchain? Blockchain is a distributed database. It enables independent verification of chain of ownership of all Bitcoin
transactions. Whenever a Bitcoin transaction takes place, its detail is broadcast over the Bitcoin network. Each network computer stores its
own copy of the blockchain. Every peer has a record of complete history of all transactions and balance of every account, in the block
chain.
Ownership: Bitcoins are registered as bitcoin address in the block chain. For spending bitcoin money, owner needs corresponding private
key and sign the transaction digitally. Volume of bitcoin: As per Bitcoin code, there is a limit to issue only 21 million Bitcoins. According to
current estimate, the bitcoin mining will last till the year 2140 AD only. Mining and creation of Bitcoin: The process of creating bitcoins is
called mining. Miners are members of public with skills to handle complex computers. They have a financial incentive (to earn Bitcoins) for
helping to validate and timestamp, the transactions The miners use the high-powered computer software, to solve complex mathematical
algorithms (puzzle) and verify them, to make the Blockchain more secure. The level of difficulty of the puzzle is very high. It takes lot of
time & effort to solve a puzzle. The miners compete to solve these problems and the first person who submits the solution, is the winner
and receives a reward of a specific number of bitcoins. Where to get bitcoins? Bitcoins are available from a) Bitcoin exchanges, b)
Purchase from other users and c) By mining. Bitcoin Units: The unit is Bitcoin represented as BTC and XBT. Small amounts of bitcoin are
millibitcoin (mBTC) and satoshi. The smallest amount within bitcoin system is 0.00000001. A millibitcoin is equal to 0.001 bitcoin.
Properties of Bitcoin transactions:
1) Transaction is irreversible when it is confirmed within Bitcoin network.
2) Bitcoins are received on an address (it is randomly seeming chain of around 30 characters). Transactions and accounts are not
connected to real-world identies.
3) Transactions are on global basis. These are confirmed within few minutes
4) Funds are locked in a public key cryptography system. As a result, the transactions are secure.
5) Anyone can install the software and can start receiving or sending Bitcoins. No permissions are required.
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