What is Bitcoin? How Bitcoin Works?

What is Bitcoin? How Bitcoin Works?

                

  • What is Bitcoin: Online virtual cryptocurrency. Can be easily transferred from one party to another, hence used as a payments system.
  • Bitcoin was created in 2009 by Satoshi Nakamoto.
  • Decentralized: It is not controlled by any government or institution.
  • Based on BlockChain which is a Public Ledger system.
  • Peer to Peer: Operates on a network of user based computers.
  • The network is created and origin block is mined.

 

HOW ARE BITCOINS CREATED

    

Bitcoin Mining: The process of verifying transactions conducted on the network using bitcoin mining software and hardware.
As a reward, Bitcoin miners receive Bitcoins for their work, a new block is created around every 10 min. The current reward is 25 bitcoins, this value halves every four years until all bitcoins am mined.

HOW DO I GET BITCOINS?

Start by setting up a Secure wallet to hold your coins

 

And then fill it up with 2 options:

  

1) Through the process of Bitcoin mining.
2) Through a trusted Bitcoin Exchange.

WHO IS INVOLVED IN THE EXCHANGE?

There are 3 parties involved in every exchange platform

The Buyer, the Exchange, the Seller.

HOW DOES THE EXCHANGE WORK?

The buyer try to buy bitcoin at the lowest possible price
The seller try to sell bitcoin at the highest possible price
The exchange earns a commission in the middle

The buying and selling bids are entered into what is called as an order book.
When the buyer and seller make the same bids, the exchange is executed.
The exchange keeps a small percentage of the amount as commission.

HOW DO TRANSACTIONS WORK?

A wants to buy something from B’s store.
B provides A with a unique address to send the payment: Eg: 1jdhdjYKbc64nKKLkd
A send the amount to B using the unique address. the transaction is processed by the miners. B receives the amount via the miners and the transaction is recorded in a distributed ledger.

 

 IS BITCOIN SECURE?

Cryptography and Blockchain make sure that transactions are secure.
The unique address that a seller provide is sort of a Public key or like a physical address that they can give to anyone.
The private key is held by the owner of the wallet who has purchased or received bitcoins. Without his digital signature/password, the bitcoin transaction cannot take place.

HOW MUCH IS 1 BITCOIN WORTH?

Currently(6th June ’17), bitcoin is worth INR 1,85,009.67 or USD 2879.00
But people are allowed to trade in decimal units if this currency. Eg: Send/buy 0.1 BTC

Alternatives to Bitcoins:

Bitcoin is a Digital Virtual Currency based on Blockchain which is open Source. And thus it has competitors.
Ethereum and Ripple are two major competitors to Bitcoin and are fast catching up.

 

Bitcoin Wallets:

BTCXIndiaCoinsecureUnocoinZebpay are the Top exchanges in India. Global List can be found here

Bitcoin Exchanges:

List of Global Bitcoin Wallets can be found here.

Let us Know if you are working on or interested in Bitcoin and Blockchain. We would be happy to help!
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