What is Bitcoin and How does Bitcoin work?

A few years ago, people were discussing “Bitcoin”.

The saddest part is, nobody had paid attention to know what bitcoin is. There are few people who have zero knowledge about cryptocurrency.

On the other hand, there are few people who have basic knowledge of cryptocurrency. All they think is that a cryptocurrency just acts like underworld banking. Also, they believe that money with crooks performing activities behind the computer.

If you believe the same, it’s time to wake up guys. Let’s discuss What is Bitcoin? Who are the founders? How does Bitcoin work? And a lot more.

What is Bitcoin (BTC)?

Money = Value = Trust

Bitcoin is the popular decentralized digital currency introduced in Jan 2009. It’s the type of cryptocurrency that uses “peer-to-peer” technology while processing. No third-party or trusted bank is involved.

Investors can sell, buy or exchange without any middleman or central authority. The Bitcoin creator “Satoshi Nakamoto”, described the importance of an electronic payment that is generated by cryptographic proof rather than trust.

Bitcoin transactions are properly documented on a public ledger i.e “Blockchain”, everyone can access the bitcoin via virtual ledger. The process makes it harder to reverse and impossible to fake. Bitcoins are not powered by the central government or other issuing agencies.

Let’s discuss who is the father of Bitcoin.

Who are the founders of Bitcoin (BTC)?

Satoshi Nakamoto is the name used by Bitcoin creators. It’s an anonymous name that is often used everywhere while discussing Bitcoin. Simply put, Satoshi Nakamoto is the pseudonym for an individual or group of founders. The Bitcoin creator would wish to stay an anonymous person forever.

The true identity of Bitcoin founders has not yet been revealed. As per Bitcoin price today, Satoshi Nakamoto is a billionaire. Satoshi plays a key role in the Bitcoin ecosystem. Despite several efforts to reveal the Bitcoin identity, Satoshi has been proven elusive. 

What makes Bitcoin (BTC) unique?

  • Bitcoin provides peer-to-peer transaction
  • Accept payments around the world
  • Low processing fees
  • No taxes
  • Low charges

As mentioned earlier bitcoin is the first peer-to-peer network. Every transaction is powered by its users. No middlemen or bank is involved. According to people’s perspective, bitcoin acts like cash online. 

Since cryptocurrency such as Bitcoin has attractive unique features, everyone around the world is opting to use Bitcoin (BTC). It’s no surprise, bitcoin will become more popular and mature in the coming years.

How does Bitcoin (BTC) Work?  

Bitcoin is a digital phenomenon with a set of predefined protocols, rules and processes.

If you’re a newbie, Bitcoin would just look like a mobile application, software or computer program that enables users to sell or buy bitcoin through a Bitcoin wallet. This is what most of the users think about the Bitcoin working model.

If you’re sailing on the same boat, it’s time to change your perspective towards the bitcoin working model. Now let’s have a look at Bitcoin behind the scenes.

Bitcoin is a computer file or document that is stored in a user’s digital wallet app on their personal computer or mobile device. Bitcoin network will be sharing a virtual public ledger – Blockchain. This is important because the public ledger holds every transaction and personal information. The public ledger is responsible for validating every transaction performed by the user on their personal computer.

Now let’s talk about authenticity. Bitcoins are named for authenticity. Every transaction is secured and protected by powerful digital signatures. Yes, you’ve heard it right!!! 

The digital signature plays an important role in Bitcoin. A digital signature is used as proof of authenticity that users own a private key. On the other hand, a digital signature will make sure that every transaction is secure from unauthorized users. Frauds and hackers cannot modify the information when a digital signature is used in Bitcoin.

Every transaction authenticity is protected and secured by the digital signature according to the user’s sending address. With a digital signature, users will have complete control while sending and receiving bitcoins from their personal addresses. Also, anybody can perform the transaction through specialized hardware. This way, they can earn attractive rewards for providing their service. In other words, this is called “mining”. 

How many Bitcoin (BTC) coins?

Bitcoin is the powerful virtual currency created through mining. The process is a bit complicated and energy-intensive because it uses system code.

Now, let’s have a look at how many Bitcoins (BTC) are left around the world.

The total number of bitcoins supply is limited by the software. The maximum supply of Bitcoin doesn’t exceed more than 21 million. Over 18 million Bitcoins (BTC) are mined so far.

Anyway, new bitcoins will be created while mining. Miners will get rewards of 50 bitcoins every block as compensation. In 2020, rewards are decreased to 3 times and comprise 6.25 bitcoins (BTC).

The founders of Bitcoins (BTC) has not mined or distributed among them before coins are available in the market. However, at the initial state, there was less competition between the miners. Hence, miners around the world accumulated bitcoins via regular mining.

Every day 900 bitcoins are mined. It means on average, it is estimated that 144 blocks will be mined every day. The last bitcoin could be mined in the year 2140.

What are the key advantages of Bitcoin (BTC) ?

Complete payment freedom – User’s can send or receive bitcoins anytime and anywhere. No signup or PIN is required. Additionally, no third party or bank is necessary. User has complete control of their bitcoins.

No taxes – Get rid of unnecessary tax deductions. Since there is no third party involvement in Bitcoin transactions, users can stay away from taxes.

Less risk for merchants – Good news for all the merchants. Bitcoins are safe, secure and don’t store customer’s sensitive information. No need to worry about fraud. Also, Bitcoin transactions have low administrative fees.

High security – All the Bitcoin transactions are fully controlled. Every transaction is controlled by Bitcoin users with high security. Users and merchants don’t need to pay unwanted fees as this could happen with most of the payment modes. All the transactions are processed without providing the user’s personal information. This offers great protection and security against theft. Merchants and users can protect bitcoins with encryption.

Can’t be stolen – Every bitcoin is safe. Nobody can steal the bitcoins. Since bitcoins require physical access on personal computers, it could be harder for attackers to steal.

Conclusion

Bitcoin is a popular digital currency that is entirely virtual. Simply put, this type of cryptocurrency acted as cash on the internet. Generally, people use it to purchase required products or services.

Bitcoin provides complete control and authority over money, unlike assets such as land, gold that you own would be regulated by the government or banks. As Bitcoins is gaining popularity, more people are accepting them as their payment mode.

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