Bitcoin is getting more and more popular across the world. People are switching from fiat currencies to bitcoins for completing their electronic transactions. Bitcoin is a virtual digital currency that is highly used as a medium of exchange in a person-to-person network. It is a decentralized currency, which means the users have complete control over their funds and no individual, central authority, or financial institution.
There is a limited supply of bitcoin as only 21 million bitcoins are created ever. Around 18 million bitcoins are in circulation, and it is estimated to exist till 2140. The limited supply of bitcoin is one of the factors that lead to a change in bitcoin prices.
History of Bitcoin
Bitcoin is the first modern open-source cryptocurrency introduced by an anonymous programmer named under alias Satoshi Nakamoto. His real identity is still unknown, many people claimed to be Satoshi, but none of them could claim about being Satoshi Nakamoto.
Many rumours were made on his identity, but once he claimed that he is a middle-aged man, staying in Japan. In 2010, he got disappeared and left the bitcoin network in the hands of the bitcoin community. Before disappearing, he introduced a lead developer to the world named Gavin Andresen. It has been found through sources that he owns over 1 million bitcoins.
Which technology is used in the bitcoin network, and who controls it?
After Nakamoto, Gavin Andresen handled the bitcoin network and handled the network with decentralization. Because bitcoin is a decentralized currency and bitcoin network’s underlying technology, i.e., blockchain technology, people were attracted to it. Bitcoin advocates understood the blockchain and know how it keeps track of Bitcoin investment by recording them in a distributed public ledger.
Not only individuals but governments, businesses, and companies were attracted to bitcoin because it allows transferring money without the participation of third-parties. Every transaction was recorded to protect the bitcoin network from any fraud. The demand and supply of coins control the Bitcoin market and not by any central authority.
Working of bitcoin
Bitcoin is a virtual currency, and it is stored in digital wallets that act like bank accounts. Digital wallets store the bitcoins and make the transactions possible. The transactions are verified by the bitcoin miners and are further added to the blockchain. 1 MB of transactions is verified at a time, and those make a “block.” A block of digital transactions is added to the blockchain.
Because transactions are recorded in a distributed public ledger, no fraud or mistake can be made, and if done, it can be corrected easily. The legitimacy of each transaction is secured by digital signatures that make the transaction possible. A bitcoin wallet has three main aspects: a bitcoin address, public key, and private key. By knowing the bitcoin address of the user, a transaction is made possible. The transactions are protected with private keys that send the bitcoins.
Features of Bitcoin
- Transparent network
The bitcoin network is transparent because it is an open-source network in which all the transactions are recorded in a distributed public ledger. Anyone can know the number of bitcoins in circulation, but no one can trace the transactions. Blockchain technology maintains user anonymity with no involvement of banks or government. Investors or traders who want to live anonymous can stay under the radar.
- Easy and fast transactions
Bitcoin transactions are made instantaneously. Users can make international payments as well in a few minutes. Unlike banks, users don’t have to wait for several days to get the transactions completed. The exchange of money has been quite easy and fast with the bitcoin network. Also, people prefer the exchange of money through bitcoin because no transaction fee is charged because there is no intermediary.
- Irreversible transactions
Unlike traditional currencies whose transactions can be reversed or stopped, bitcoin transactions are irreversible. Once you click the send button, you cannot revert the transactions. There is no bank or middle man in between that could stop the transactions. You may lose your bitcoins if mistakenly you send the payment. It is recommended to double-check the amount, bitcoin address, and every other detail before making the payment.