Bitcoin is the first cryptocurrency introduced in the whole world. It is a decentralized currency which means that it is not managed by a central bank or authority. It can be sent from one user to another on a peer-to-peer network, without any involvement for intermediaries.
Cryptocurrencies are also known as digital currencies or virtual currencies. They are created with the motive of working as a medium of exchange, just like the fiat currencies. Digital currencies work on the public distributed ledger known as Blockchain. Bitcoin also uses blockchain technology to record all the transactions and make it safe and secure to trade.
Who Created Bitcoin?
Bitcoin was created by a pseudonymous named Satoshi Nakamoto. He proposed Bitcoin in the year 2008. It was adopted as a digital currency in 2009 when its source code released as an open-source software. He introduced Bitcoin as an electronic payment system. The purpose was to induce a means of exchange that is independent of any central authority. And promotes secure, immutable and verifiable transactions electronically.
How Does Bitcoin Work?
Bitcoin is stored in a digital wallet on a phone or computer. People can send or receive Bitcoins in their digital wallets. Each of these transactions is recorded in Blockchain which helps in tracing the history of a bitcoin and stopping any kind of fraud.
Mining is the process through which bitcoins are created and its transactions are verified. Companies and independent individuals who have the governing computing power can participate in the Bitcoin network of mining. These participants are known as miners and are motivated by rewards and transaction fees paid in bitcoin.
How Do People Get Bitcoin?
There are mainly three ways by which people can get bitcoins:
- They can buy Bitcoins using real or fiat money.
- People can receive Bitcoins as payments by selling something.
- Bitcoin can be created using a computer through Mining
Bitcoins can be exchanged for other fiat or cryptocurrencies, products, and services. The system of Bitcoin allows payments to be done between users without passing through a central authority like a bank or payment gateway. Bitcoins are not printed like dollars or other currencies, they are created and held electronically and are produced by computers using free software.
What are the Features of Bitcoin?
Let us now look at the features of Bitcoin that attract people towards it.
- Decentralization- The most important characteristic of Bitcoin is its decentralization. No central or single institution controls the network of bitcoin. This attracts people who are not comfortable with banks or the government’s control.
- Fast and borderless- Bitcoin transactions are done instantly in the network and confirmation gets done within a couple of minutes. Since transactions take place in a global network of computers, they are entirely indifferent to your physical location. Thus, Bitcoin promotes fast and borderless transactions.
- Pseudonymity- In traditional electronic payments, senders are usually identified but in Bitcoin, users operate in semi-anonymity. Since there is no presence of any central validator, there is no need for users to identify themselves during the transaction. When a transaction request is given, the protocol verifies all previous transactions to make sure that the sender has the necessary bitcoin and also the authority to send them.
- Immutability- Transaction of Bitcoin cannot be reversed, unlike the fiat electronic transactions. Electronic fiat transactions are controlled by a central authority that you can contact for reversing the transaction. But the lack of any central authority makes Bitcoin transaction irreversible and immune from any tampering.
- Secure: Bitcoins are secured with strong cryptography. Its funds are secured in a public key cryptography system. The Crypto owners are provided with a private cryptography key to decrypt and send cryptos.
Bitcoin is one of the most traded cryptocurrencies globally, right now. The above characteristics of Bitcoin make it popular among traders and investors alike. Most traders and investors of Cryptocurrency prefer Bitcoin as their first choice because of its popularity. Blockchain technology makes it more secure and reliable, as the transactions here get verified and are traceable.