Coming to the basics of the term bitcoin, it is a form of digital currency created in the year 2009 by an unknown and pseudonymous Satoshi Nakamoto. The subject is highly in talks but is not new to the display. In terms of export rate and popularity, this form of cryptocurrency is high among the youth and big businesses. Over the last few years, it has gained tremendous attention in the finance industry. The growth of this cryptocurrency has triggered other forms of digital money. We altogether know these virtual currencies as Altcoins.
However, underneath the jargon lies a limitless and modern form of groundbreaking technology that can transform the history of finance and digital money in the coming years. Bitcoin is transparent and open and promises lower fee transactions as compared to the traditional forms. No supreme authority, financial institution, or government controls the transactions of bitcoins. People can buy or sell them without displaying their names and account numbers, all they need is an encrypted key that allows them to perform the transactions without reaching the bank. This cryptocurrency operates in a decentralized network, and every transaction is recorded and maintained in a public log, maintaining the privacy and limiting third-party access.
HOW ARE THEY CREATED?
Unlike the traditional form of currency, bitcoin is not printed on paper. A decentralized process known as “mining” generates them. It requires a lot of computing and high technology power to find the correct network areas for mining bitcoins. Here individuals are rewarded with a network to perform their services. Specialized hardware is used to perform transactions securely and collect new bitcoins in exchange. The process of mining and creating more bitcoins is very complex and requires a lot of efficiencies.
The value price and production of bitcoins are highly dependent on the direct relationship between supply and demand. It says when the demand for bitcoins increases, the price will increase accordingly, and when the demand will decrease, the price will decrease respectively. Only a limited amount of bitcoins are present, thus they are produced at an increasing and decreasing rate. In order to keep the price stable, the demand factor must follow this level of inflation.
HOW TO STORE BITCOINS?
Storing bitcoins after exchanging or purchasing in digital wallets is the most secure and easy method. A digital wallet is a software-based system that collects your information and stores them, such as an address, passwords, payment details, transactions, and requires a passcode or a key to fund within it. It acts as a virtual bank account where you can receive or send any form of money. Digital wallets are safer and easier to access when compared to traditional bank accounts.
BLOCKCHAIN TECHNOLOGY
Bitcoin operates using blockchain technology. It can be described as a public plan or record of transactions in a bitcoin network, consisting of every payment detail through a global consensus. The fundamental principle of blockchain technology is to make sure that every transaction in a network is indisputable. However, blockchain technology has several other uses too, for example, it can be used in industries such as real estate for fractional property ownership and for energy trading. Boosting up the growth of cryptocurrencies, blockchain technology brings a fresh wave of innovation in the market sector that can transform the traditional finance history.
One of the biggest benefits of using bitcoins in transactions is that they can make payments anywhere around the world, and can be exchanged by individuals frequently and easily. However, it can make you lose all your investment as bitcoin is highly volatile and one should invest at their own risk.
