What is a Bitcoin, How It Works, and What Are The Features?
From the hundreds of cryptocurrencies available in today’s time, Bitcoin is the most demanded virtual currency across the world. People consider this cryptocurrency similar to conventional currencies because it can be used as a medium of exchange to buy and sell things.
Bitcoin is a digital virtual currency-related to a central authority or financial institutions’ urge.
Like conventional currencies, bitcoin also has a value comparable to goods, services, and other currencies. Bitcoin got popular because it is the most flexible cryptocurrency across the world.
It is popularly used to buy and sell goods to companies or organizations that deal with bitcoins. People exchange bitcoins with other users as an appreciation for their services or to reconcile pending debts.
Bitcoin came into existence by an individual or a group of people referred to as Satoshi Nakamoto in 2009. Bitcoin is the piece of code that can be subdivided into decimals representing the smaller units of bitcoin value.
People gave the most diminutive unit name Satoshi, and the smallest bitcoin unit is 0.00000001 Bitcoin. The bitcoin can’t be further divided after Satoshi.
Working of Bitcoin
Bitcoin is a decentralized currency, which means it is not controlled or governed by central authorities or national government.
The bitcoin network works on blockchain technology that makes sure the entire system secure. The specialized computers need to solve the complex mathematical algorithms to verify every transaction to mine bitcoins.
Bitcoin is maintained by source code, and the principles of code are called cryptography. The cryptography is based on engineering and sophisticated mathematical principles, making it impracticable to break the source code of bitcoin and maneuver currency supply.
There are many other virtual currencies present worldwide, but bitcoin is considered as the first modern cryptocurrency.
It is easy to trade in bitcoins because there is fantastic online trading software available like crypto-gps.com/ that allows you to change easily.
No other cryptocurrency has offered such unique features as bitcoin that you will know in this article:
Bitcoin exchanges are the places where the users can exchange the bitcoins for conventional currencies.
All the bitcoin exchanges provide different exchange rates. Bitcoin can also be traded for other cryptocurrencies in bitcoin exchanges. These exchanges usually charge around 1% of the transaction value from the user.
The bitcoin exchanges’ responsibility is to make sure that the bitcoin market stays liquid and allows the bitcoin holders to gain profit from conjecture on variation in Bitcoin’s value.
The users need to understand that the bitcoin market is volatile, and its price keeps on fluctuating.
The bitcoin system is designed to record all the bitcoin transactions without displaying the person’s entity.
Bitcoin users use digital wallets to store their bitcoins, and hence they are identified by their wallet address and public keys. Users identify other users by numerical codes of public keys and usernames.
The entire bitcoin system is based on blockchain technology. The blockchain technology stores the transactions in blocks that are further added to the blockchain.
The blockchain is considered as a public distributed ledger that keeps track of all bitcoin transactions. The bitcoin miners do the work of verifying the transactions by solving complex mathematical problems and adding them into blocks.
Bitcoin transactions take place frequently, and therefore the blockchain grows continuously with time. Miners are the specialized computers that produce a new blockchain in every 10 minutes.
A bitcoin transaction, once added in the blockchain, is considered verified and legal. Bitcoin users must understand that bitcoin transactions are irreversible, and once you made the transaction, you lose your bitcoins.
Bitcoins don’t have a physical appearance, and therefore, they are stored in digital wallets.
The wallets do the job of protecting users’ bitcoin from theft or malicious attacks and the different types of digital wallets available, like hardware wallets, software wallets, paper wallets, etc. All these wallets offer different security features.
A digital wallet has a Private Key, Public Key, and bitcoin address. The private Key is crucial because it confirms the wallet owner’s identity and allows them to send and receive bitcoin units.
Once a private is lost, it can never be recovered; therefore, one must never reveal their private Key to any other user.