Bitcoin, as most people know by now, is a form of digital currency. Being decentralized, it is independent of any law governing it and doesn’t need any intermediary to maintain the cash flow between 2 peers. Here’s a short guide in knowing what bitcoin actually is.
Bitcoin was established in 2009, by an anonymous Santoshi Nakamoto, and was the first cryptocurrency to have fully developed and launched. As mentioned above, the main aim was to create a decentralized electronic cash flow system. The owners of bitcoins are also anonymous; there is no information about the person itself, just a wallet key can be obtained which in no way links to the actual owner. Blockchain technology is used to connect peers with each other. Each block is an encrypted ledger of the transactions made and is mined, similar to gold and silver, by users who want to earn bitcoins.
How can one mine bitcoins?
Only 21 million bitcoins are ever going to come into existence, out of which over 18 million have been mined to this date. Mining is done by very complex and powerful computers: a complex mathematical problem related to the cryptographic hash algorithm has to be solved which gets even tangled up over time. Every time a block is mined, it is added the previous blockchain and the miner get Bitcoins or parts of it. On average every time a transaction is made, within 10 minutes of it, a block is mined.
How can you use and earn bitcoins other than mining?
If you own a business, you can accept payment in bitcoins. All you need to do is set up a bitcoin wallet; you can use Coinbase for that, and you are good to go. There are also certain sites that award you with bitcoins on completing different surveys. Several bitcoin exchanges operate which, in exchange for regular currency, provide you with bitcoins. Several other sites which accept bitcoin as payment.
What are the risks involving bitcoin?
Everything comes with some pros and cons. Bitcoin is no different. Since it is decentralized, there are no regulations to resolve any issues if a user gets into one. Transactions cannot be reversed once made and added to the blockchain, thefts cannot be recovered because you are the boss of your own money here and if you get robbed, the boss cannot ask anyone else for help. Such an event occurred in 2014 with Mt Gox, which was a bitcoin exchange. It got robbed off of 850,000 bitcoins and thus went offline. Another risk that many people might see is its high volatility. Bitcoins value has always remained on some serious steroids, every year it jumps from one extreme to another.
This was it for now but the time, as passes, the technology will mature more and people will become more educated about it.