What is Bitcoin?
Bitcoin is a cryptocurrency and a digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009.
First of all, there is a difference between the terms ‘Bitcoin’ and ‘bitcoin’. Bitcoin, where the “b” is capitalised, refers to the entire system itself. It’s like learning a language e.g., “I learned Spanish today.” On the other hand, bitcoins, where the “b” is not capitalised, refers to the actual currency itself. You could say “I spent 10 bitcoins to purchase this item.”
Bitcoins is a form of virtual currency- meaning, if you have bitcoins, you do not physically purchase goods by handing notes or tokens to the seller. Bitcoins are used for electronic purchases and transfers. You can use bitcoins to pay friends, merchants, etc. Every single purchase is immediately logged digitally (on computers) on a transaction log that tracks the time of purchase and who owns how many bitcoins. Think of this transaction log as an audit trail: it contains every single piece of information of every bitcoin transaction. This digital transaction log is called ‘blockchain’.
The blockchain records every single transaction — of present and past — and the ownership of every single bitcoin in circulation. The people who are constantly verifying the blockchain, ensuring that all the information is correct and updating it each time a transaction is made, are called ‘miners’. One way to think of miners is: they those who confirm transactions. Their job is to ensure that the transaction is secure and processed properly and safely. In return for their services, miners are paid fees by the vendors/merchants of each transaction and are also given physical, minted bitcoins.
How bitcoins work?
Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who ‘mine’ them by lending computing power to verify other users’ transactions. They receive bitcoins in exchange. The coins also can be bought and sold on exchanges with U.S. dollars and other currencies.
How much is it worth?
One bitcoin recently traded for $1,734.65, according to Coinbase, a company that helps users exchange bitcoins. That makes it more valuable than an ounce of gold, which trades at less than $1,230. The value of bitcoins can swing sharply, though. A year ago, one was worth $457.04, which means that it’s nearly quadrupled in the last 12 months. But its price doesn’t always go up.
A bitcoin’s value plunged by 23 percent against the dollar in just a week this past January.
How are bitcoins kept secure?
The bitcoin network works by harnessing individuals’ greed for the collective good. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction.
The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional bitcoin. As long as miners ..
Will the blockchain transform the Internet & the global economy?
Make no mistake about it. Blockchain is a highly disruptive technology that promises to change the world as we know it. The technology is not only shifting the way we use the Internet, but it is also revolutionising the global economy.
Blockchain has applications that go way beyond obvious things like digital currencies and money transfers. From electronic voting, smart contracts & digitally recorded property assets to patient health records management and proof of ownership for digital content.
The potential impacts of blockchain technology on society and the global economy are hugely significant. With an ever growing list of real-world uses, blockchain technology promises to have a massive impact. This is just the beginning.
Many of the most exciting applications and platforms haven’t even been invented yet!
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