Bitcoin is a type of cryptocurrency, invented by Satoshi Nakamoto in January 2009. However, there are many controversies about the developer i.e. it is not still confirmed that Nakamoto has developed bitcoin or someone else, his identity still has to be proved. Anyway, bitcoin is an alternative to real money as it can use to make online payments. It is the digital currency which utilizes peer to peer technology in order to make payments. Bitcoin saves heavy transfer fees or transaction fees and it is not controlled by government authorities rather a decentralized authority control it.
Unlike flat money, bitcoin does not has any physical existence, they are stored in public ledger known as blockchain. Users can make transactions using bitcoin wallets where public and private keys are generated in order to receive coins or send coins. Keep in mind that coins are not stored in wallet, they are stored in blockchain so don’t get confuse with both terms. Blockchain is vast domain, in short we can say that it consists of chain of blocks. Blocks are stored in a chain and each block contains digital chunks of information. Such pieces include hash key, transaction information (date, time, and amount), and information of user. Blockchain is highly secured and minimizes the chances of hacking. However, if a hacker decrypt the private than he can steal the bitcoin from the account.
It is the process of producing new bitcoins that will be added to blockchain. Mining involves solving of computational algorithms in order to discover a new block. In return miners receive rewards of bitcoins. Remember, as the miners create more bitcoins the required computer power also increases. So, real money require matched gold for releasing similarly bitcoin needs mining.
Rules and regulation
The legal status of bitcoin is still ambiguous, no rules are declared for it. Some countries have announced it as legal but on the same time it is declared as unlawful in other countries. It is complex to keep the track back of transaction. The anonymity makes tax collection difficult as it is hard to determine the origin of transaction like who is actually making the transactions. US authorities have declared it as legit, license are issued for bitcoin traders and holders.
Therefore, Bitcoin is not the only digital currency, there are many other circulating in the market. it is crucial to understand the working so that the risk factor can be minimized. Invest whatever you can afford to lose.
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