Understanding Bitcoin – Currency of the Future ?

At Techstory, we write about ideas and people who are changing the way the world is working today. I recently spoke to an entrepreneur who was working on a extremely innovative solution using Bitcoin. Bitcoin ! An extremely revolutionary concept. Applications of which could solve so many problems the world sees today. Bitcoin ! A concept that is so innovative ! And yet a large amount of population doesn’t understand it ! (More than Half of Americans Have No Idea What a Bitcoin Is). In this article we at Techstory bring you everything you need to know about this digital currency.

bitcoin

What is Bitcoin ?

Bitcoin is the first decentralized electronic currency not controlled by a single organization or government.Bitcoin was launched in 2009 by a mysterious person (or persons) known by the name Satoshi Nakamoto. Bitcoin lets you send money to anyone online, anywhere in the world for less than a cent per transaction!  Email let us send letters for free, anywhere in the world. Skype lets us make phone and video calls for free, anywhere in the world. Now there’s Bitcoin. Bitcoin is a community run system not controlled by any bank or government.

How Does Bitcoin work ?

Bitcoins are completely virtual coins with no need for banks to move and store the money. Once you own bitcoins, they behave like physical coins: they possess value and trade just like they would if they were in your pocket.  You can use your bitcoins to purchase goods and services online, or you can keep them away and hope that their value increases over the years.

Bitcoins are traded from one personal ‘wallet’ to another.  A wallet is a small personal database that you store on your computer drive, on your smartphone, on your tablet, or somewhere in the cloud.

How are Transaction Processed ?

At the heart of the Bitcoin network is a shared, public record of Bitcoin transactions known as the blockchain.  Every transaction that has ever occurred is listed in the blockchain, and every node (i.e. computer) in the Bitcoin network has its own copy.

Whenever someone wants to make a transaction, he or she will announce the transaction including details such as the sender, recipient, amount, and other information to the network. Nodes share these announcements in peer-to-peer fashion so that everyone soon has all the information.

Nodes examine each transaction to make sure that it complies with the rules of the Bitcoin network. Nodes verify that each transaction has a valid digital signature from the sender, and that the sender has at least as many bitcoin as the sender is sending to the recipient. These checks ensure no one can spend money they don’t have.

Nodes combine all the valid transactions they have heard about into a block and then work to solve a difficult mathematical problem that takes this block as an input. The first node to solve the problem announces the solution to the other nodes. The other nodes verify that the problem was solved correctly. If it was, then they put the block at the end of their copy of the blockchain. Once most nodes have done this, the block is considered to be an official part of the blockchain, and transactions in that block are considered final.

 What are the Advantages of Bitcoin over other currency ?

Mobile payments made easy

Bitcoin on mobiles allows you to pay with a simple two step scan-and-pay. No need to sign up, swipe your card, type a PIN, or sign anything. All you need to receive Bitcoin payments is to display the QR code in your Bitcoin wallet app and let your friend scan your mobile, or touch the two phones together (using NFC radio technology).

Security and control over your money

Bitcoin transactions are secured by military grade cryptography. Nobody can charge you money or make a payment on your behalf. So long as you take the required steps to protect your wallet, Bitcoin can give you control over your money and a strong level of protection against many types of fraud.

Works everywhere, anytime

Just like with email, you don’t need to ask your family to use the same software or the same service providers. Just let them stick to their own favorites. No problem there; they are all compatible as they use the same open technology. The Bitcoin network never sleeps, even on holidays!

Fast international payments

Bitcoins can be transferred from Africa to Canada in 10 minutes. There is no bank to slow down the process, level outrageous fees, or freeze the transfer. You can pay your neighbors the same way as you can pay a member of your family in another country.

Zero or low fees

Bitcoin allows you to send and receive payments at very low cost. Except for special cases like very small payments, there is no enforced fee. It is however recommended to pay a higher voluntary fee for faster confirmation of your transaction and to remunerate the people who operate the Bitcoin network.

Protect your identity

With Bitcoin, there is no credit card number that some malicious actor can collect in order to impersonate you. In fact, it is even possible to send a payment without revealing your identity, almost just like with physical money. You should however take note that some effort can be required to protect your privacy

Can Bitcoins not be forget or counterfeited ?

For all intents, yes, bitcoins are forgery-resistant.  It is so complicated to create a bitcoin, it isn’t financially worth it for counterfeiters to do so .

What is the current value of a Bitcoin ?

1 Bitcoin = 254.68 US Dollar

 

For all the required information on Bitcoins please visit https://bitcoin.org/en/ 

 

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