What are Bitcoins and why are they so popular?

Introduction

Bitcoin was created in 2008 and was launched in 2009 by the mysterious Satoshi Nakamoto as an open-source project that uses peer-to-peer technology to enable a new kind of electronic cash.

The Bitcoin network runs on a decentralised peer-to-peer computing network called the Bitcoin network, which means no central authority oversees it.

The currency is designed to be completely free of central authority. It is instead governed by a set of basic principles, called “Satoshi Nakamoto’s original design,” in which transactions are recorded on a public ledger that is called the Blockchain, which is shared by everyone connected to the network.

The network is a “peer-to-peer” system. That means it works like a large, decentralised company. It’s a “decentralised” network because there is no central authority. No one company controls it, as a bank does, and no single person or group controls it, like a government. Instead, the entire network operates as a single unit, and anyone can use it.

This means that all of the transactions are recorded in a shared ledger called the Blockchain, which is shared by everyone in the Bitcoin network. This shared ledger ensures the most accurate accounting possible for all the transactions.

So what’s it all about?

Bitcoin is a type of currency, just like any other, and it is treated as such. Wallets that are safe to use are used to conduct the transactions. However, it is not under the jurisdiction of any government or financial organisation at this time. Yet. It is widely used in worldwide e-commerce operations and is well acknowledged.

The assumption is that it will be owned and administered by the community members. Decentralised and distributed by peer-to-peer members, Bitcoin is a decentralised digital currency that allows users to participate in new transaction activity while archiving old activity in what is known as “blockchains.”

A complete ‘copy’ of all transactions is stored locally and used to verify new activity between participants, preventing anyone from malformed, adding or creating fake transactions within the blockchain. This ‘consensus’ approach protects the security of Bitcoin transactions.

Bitcoin works in not a dissimilar way to PayPal in that you have a digital wallet with a unique address where people can send you Bitcoins. You can install a wallet on your device or download the entire Bitcoin wallet and participate in the network as a node.

What Are Some Benefits of Bitcoins?

Easy to Use:

Bitcoin is not a hard currency to convert or use compared to the traditional currency. So, it is easy to use and even used to make payments.

Cheaper to Use

With bitcoins, there are no transaction fees. It is free and cheap. You just need to make a new wallet. So, it is much cheaper to use.

Bitcoin is not subject to inflation or inflation rates

Unlike the traditional currencies like the dollar, pound, etc., which are subject to inflation. You cannot change the value of the bitcoins by buying them from someone else.

It’s a digital currency

There is no central authority or authority to manage bitcoins and their rate. So, it is called a decentralised currency. It is not the currency of the government.

Easy to Store

Unlike the traditional currency. If you are worried about the safety of your bitcoins or if you are planning to use them in a different country, then you can store them in your wallet safely. And there is no issue in sending and receiving from your wallets.

It is easy to transfer

If you are concerned about the currency exchange rates, then it is easier to transfer your bitcoins to someone or from someone with just a few clicks.

OK, where do I buy Bitcoins?

Unless you have some Bitcoins coming your way via a payment, you will need to purchase Bitcoins in your real currency. Purchasing is all about trust as it is not regulated; however, that’s how eBay started, where users trusted each other to pay for and send items, and they’ve done rather well for themselves.

How can you earn Bitcoins?

There are several ways that you can earn Bitcoins. The easiest way to start is to buy a Bitcoin wallet and purchase your first cryptocurrency. Once your wallet is set up, you can start using Bitcoin to purchase items and pay for services online.

The most common way to purchase a Bitcoin wallet is through one of the many Bitcoin exchanges that are available online. You can also purchase a Bitcoin wallet from the Bitcoin network itself. You can download a Bitcoin wallet directly from the Internet using your computer and set it up to send and receive Bitcoins or buy one through a Bitcoin-related website.

Once you have a Bitcoin wallet set up, you can begin to purchase Bitcoin from the Bitcoin network itself using a Bitcoin exchange. You can also purchase Bitcoin directly from exchanges and brokers that deal in the Bitcoin currency. These exchanges are often called Bitcoin shops because they typically have a store with the Bitcoin logo and sell Bitcoin in exchange for fiat currency or other cryptocurrencies.

The Bitcoin coal face

As it is known, Bitcoin mining is the process of generating Bitcoins, and a small payment in the form of units of Bitcoins is paid for the time and effort your hardware is used and your level of participation. This is done via several methods, from using your own PC’s CPU or GPU to using ASIC miners (Application Specific Integrated Circuits); these are designed for the specific purpose for which they are built, generating Bitcoins.

Unless you have significant investment to purchase powerful ASIC miners such as those from butterflylabs.com, which can run at 600GH/s (Hash’s per second), you will have to look at USB ASIC Miners such as the popular BlockErupter, which generate 336MH/s. Using the BlockErupters, you can create your USB hub style rig running lots of them concurrently.

However, the reality is that it may be too late in the game to make any serious money from Bitcoin mining. The complexity (Hash rate) of the BlockChain is now such that even joining and contributing to a Mining Pool, where miners work together and share the profits, will likely see more spent on electricity than in any real financial return.

The future of Bitcoin

Bitcoin, a form of digital money, is making its way into mainstream culture. Bitcoin can buy goods online, pay friends back for dinner, or invest in the stock market. The digital currency has an astronomical market capitalisation and is accepted by many major companies.

Bitcoin has become quite profitable; however, it also has its drawbacks. It’s not easy to understand, and the cryptocurrency’s volatility makes it risky to put all your eggs in one basket.