Hi folks, I hope you guys are doing great. In my previous post, I have discussed what cryptocurrency is. Before I go in detail about Bitcoin, let me tell you. Go and read the last article about cryptocurrency. As you should have information about cryptocurrency before jumping into bitcoin.Bitcoin has become a buzz word now. It’s been around 12 years since Bitcoin release. A person or group of people name Satoshi Nakamoto emerge bitcoins that host a digital currency bitcoin.The individuals who already knew about Bitcoin are curious about it that how is it going to leave an impact on our daily lives in the future. I am here to answer all of your questions and that will clear all your doubts and curiosity.So we are going to cover all these topics down below:
- What is Bitcoin?
- Understanding of Bitcoin in Depth.
- How Does Bitcoin work?
- What is Mining?
- Useful Definition for Bitcoins wallet.
- How can I store my Bitcoins?
- Types of wallets.
- How to Buy Bitcoins?
- Pros of Bitcoin.
- Cons of Bitcoin.
Introduction to Bitcoin
- Bitcoin is the official first cryptocurrency that had been released in 2009. It is basically a digital currency and only exists electronically.
- Bitcoin becomes known in 2009 when the world economy was on the crisis. Those big banks were doing fraud with clients and manipulating the system.
- So, basically Bitcoin founder actually wants to get rid of the third party and put the seller in charge. They want to make transaction safe and secure without any interest fees and corruption.
- Bitcoin is a decentralized system, it means it doesn’t have any central hub or any insinuation like banks etc that controls the amount of Bitcoin.
- Bitcoin has come too far in such a short time. Now globally different big companies are accepting Bitcoin as currency.
Understanding of Bitcoin in DepthBitcoin has a different importance for different persons.The Bitcoin process is organized and easy to understand. Bitcoin uses peer to peer technology for the transaction of Bitcoins. All of these transferred are tracked on “Blockchain” and known as the giant ledger. This giant ledger saves all the transaction of Bitcoin that ever made.The giant ledger records every transaction and whenever it made.17 million bitcoins are currently in circulation. No one is yet controlling the supply of bitcoins, that’s means that supply is controlled by design. The total supply of bitcoins that will be ever created is 21 million bitcoins.
How Does Bitcoin work?Before further getting into details about working of bitcoins, if you are not interested in the technical process then you can check my last article about cryptocurrency where you can find a simple example of bitcoin working.As I told before, Bitcoin is decentralized and work on a giant ledger also called a blockchain. Bitcoin is a secure process and uses a great verification method which minimizes the risk of hacking and fraud.Volunteers of bitcoin referred to as” miners” who constantly update and verify the blockchain as you all know that bitcoin is decentralized.When a specific amount of bitcoin transactions is verified then another block is added to the blockchain and that’s how the business continues as usual.May you have heard the term “mining” many times when reading about bitcoins. So I will explain to you briefly today about mining.
Introduction to Mining?As you all know now that in bitcoin there is no central hub for verifying the transaction of bitcoins. So all the people on the networks are verified each transaction.The people who are verifying transaction are miners and all of this process will be called Mining. Mining is a process that keeps the bitcoins secure by adding the new transaction or updating it and keeping them in the ledger.Let me explain the process simpler so you will understand. Now you must be thinking how could a person sit 24 hours for this single process and verify and update all the procedure. Actually, there is not any human being who is doing this process but hardware are used to perform Bitcoin mining. And these hardware called miners.Miners are presented with math problems and the first one who will solve this problem will add a new transaction (or block) in the ledger. All of these calculations are stand on Proof of Work.There is a reward system involved in the process of Bitcoins. The one miner who will solve first will get a reward. The reward got changes over time with the update of Bitcoin programming.The most successful process uses in bitcoin is ASICS–Application-Specific Integrated Circuits. ASICS are hardware systems similar to CPU but these are only designs for bitcoin mining.All of the mining processes take a lot of power and effort. The competition is higher in this bitcoin mining and that makes it difficult for new people to enter the race and get profit.
Bitcoin walletsThere are different applications you can use to store your bitcoins in the wallet. As you all know already this is a digital currency and you can’t keep it in your pocket. But first, let me introduce you some useful definition before going further in detail.
- Exchange Platform
- Hard Wallet
- Public Cryptographic Key
- Private Cryptographic Key
- Wallet platform
How can I store my Bitcoins?Now you can understand the bitcoin wallet terms easily. Let’s jump into it with further details.Bitcoin has secure transaction technique and it is difficult to hack the wallet and if you had ever heard that bitcoin being hacked. It does not mean that someone wallet got hacked but it would be probably the exchange platform.There are different wallet platforms and are extremely secure that make it impossible to hack.
- Full Client
- Hard Wallet
- Web Client
- Lightweight Client
Types of Bitcoin walletsWallet basically comes with five different main types. Each type has its own advantage and disadvantage.
How to Buy BitcoinsIt was difficult to buy bitcoin in the past because of the trouble of finding a trustworthy place to buy bitcoins. But now as the popularity of bitcoins, the demand for bitcoins got increased and many new companies have decided to help in easily purchasing Bitcoins.Now day’s bitcoins exchanges are receiving huge investments.Coinbase is a good platform to buy and sell your bitcoins. Its got launched in 2012 and providing users with an easier way to buy bitcoins. It is the easiest ways for newcomers who want to buy bitcoins.Gemini is another great place to buy bitcoins. It was founded in 2015 by Tyler and Cameron.
Pros of Bitcoin
- Payment can be made to anyone and at any time instantly
- Does not require any third party for the transaction
- Data of Bitcoin can’t be manipulated by any person, bank, or government
- Processing fees of bitcoins are low
- Transaction of Bitcoin can’t be reversed
Cons of Bitcoin
- Bitcoin Exchange hacks
- Mining Scams
- Lack of adoption by business
- The strength of bitcoin lies in its networking effects.
- Transactions are slow and you have to wait almost ten minutes for your network to approve