Bitcoin is a virtual currency which has gained popularity over the years. If you are new to Bitcoins you may have several questions in your mind like from where Bitcoins come? Where can I get them? Is Bitcoins Legal? In this article, I am going to tell you about Bitcoins in detail which will help you to know all about Bitcoins.
Bitcoin is a cryptocurrency and digital payment system. It is the electronic currency and a form of digital public money. It is the first decentralized digital currency because the system of Bitcoins works without a central repository or single administrator. Bitcoin was invented in 2009 by an unknown person or group under the name of Satoshi Nakamoto.
The Bitcoin system is peer-to-peer and transactions take place between users directly without any intermediary. The transactions are verified by network nodes and recorded in a public distributed ledger called blockchain.
Bitcoins are not created and regulated by any central bank
Because there is no bank involved so government tax agencies and police cannot track your money movement. This unregulated money is a threat to government control, taxation and policies. Bitcoins are becoming the tool of money laundering.
Between 2011 and 2013, criminal traders made bitcoins a media sensation by buying them in the batches of millions of dollars so that they can move the illegal money out of the eyes of the law. Because of this, the value of Bitcoins skyrocketed.
There no bank involved in transactions
Bitcoins are transferred via a peer-to-peer network between individuals so there is no middleman or bank. There are no withdrawal and spending limits imposed on the Bitcoins wallet. Bitcoin accounts cannot be frozen and banks and other intermediary are completely unnecessary for the Bitcoin move. Bitcoins are beyond the control of law, police and financial institutions.
A new way to store your money
Bitcoins are the complex pack of data which have value in them. They are designed to put the control of personal wealth back in the hands of individuals. Bitcoins are changing the way how individuals store and spend their personal wealth.
No Insurance protection of Bitcoins wallet
Bitcoins are stored in a digital wallet which exists in the cloud or on the computer of a user. The Bitcoin wallet is like a virtual bank which allows the users to send and receive the Bitcoins. If your wallet is in a cloud, the server can be hacked and you can lose your Bitcoins. If your wallet is on the computer a virus can destroy it or you can accidentally delete them. So there is no security of Bitcoin wallets.
When Bitcoins change hands or wallet, the result is final, these transactions are irreversible. There is no insurance protection of Bitcoins wallets if you lose the hard drive data or password of your Bitcoin wallet then the content of your wallet is gone for forever. There no other way to get that data back so the Bitcoins wallets are quite insecure.
Bitcoins maintain the Anonymity
In Bitcoin transactions, the name of the buyers and sellers are never revealed only their wallet IDs are revealed. Bitcoins transactions are private and they let the user buy or sell anything without easily tracking. That is why Bitcoins are becoming the currency for online buying and selling drugs or other illegal activities.
The future of Bitcoins
The future of Bitcoins is uncertain. The Bitcoin market is unregulated but it can change because governments are concerned about the taxation and their lack of control over currency.
As Bitcoins not regulated by any country or financial institution so they are making the international transactions and other transaction cheap and easy. Businesses like Bitcoins because there is no transaction fee involved in Bitcoins transactions like when a business get payment via credit card a transaction fee is levied by the financial institutions.
You can buy merchandise by using Bitcoins. Nowadays many people are buying Bitcoins as an investment, hoping the value of Bitcoins will go up in future.
Bitcoins are the virtual currency which is designed to be self-contained their value and there is no bank or financial institution involved to move or store the Bitcoins. Bitcoins behave like physical gold coins and possess value. You can buy goods and services online by using Bitcoins. Bitcoins are traded from one wallet to another.
Last year in the month of November the price of bitcoin was around 700 USD which is now at 7500 USD. You can imagine by this how the popularity of this currency has increased over the years.
When the number will reach 21 billion coins, the Bitcoins will stop being created.
There is no precious metal behind the Bitcoins the value of each Bitcoin resides within the Bitcoin itself.
Bitcoin mining means a process through which new Bitcoins are created or released. Bitcoin mining is a process by which Bitcoin transaction is verified and added to the public ledger.
The ledger of past transaction is known as blockchain. The blockchain made the confirmation about every successful transaction to the rest of the network after taken place. Anyone who has the access to the internet and suitable hardware can participate in the process of Bitcoin mining.
In Bitcoin mining, the recent transactions are compiled in the blocks and the participant tries to solve a computationally difficult puzzle. The participant who solves the puzzle first will get the chance to place the next block on the blockchain and claim the reward. The reward will have transaction fees associated with the transaction complied in the block and a newly released Bitcoin. This reward is also known as Block reward.
In 2009, the block reward at 50 and in 2014 it was 25. The block reward will decrease continuously. The difficulty level of the puzzle depends upon how much efforts are being put into the Bitcoin mining across the network. The difficulty level of the Bitcoin mining can be adjusted in roughly every two weeks or by the protocol every 2016 blocks. The difficulty also adjusts automatically with the aim of keeping the rate of block discovery constant.
If more computational power is applied in the mining, the difficulty level of the puzzle will increase and if the less computational power is applied than the difficulty level of the puzzle will decrease which will make the Bitcoin mining easier.
Initially, the Bitcoin mining was done with the help of CPUs from the normal computers. But with time graphics cards and graphics processing units gained the popularity and became the effective devices for Bitcoin mining. Nowadays ASIC (Application-Specified Integrated Circuit) hardware which is specially designed to make the Bitcoin mining more effective has gained the popularity.
The first ASIC was launched in 2013 and since then ASICs are improving. Now the Bitcoin mining is becoming more competitive and can be done profitably with the help of the latest ASIC devices. Without the use of latest ASICs, the cost of energy consumption is more than the revenue generated.
Bitcoins can be purchased and store in an online wallet. There are various Bitcoin exchanges are available in India such as Unocoin, Zebpay, Coinbase, Coinsecure etc.
All of these exchanges provide different kinds of features and security. So you can select any of them which you like the most. After that, you can create an account by registering on the selected Bitcoin service provider. This wallet will help you to store your Bitcoins and you will be able to buy or sell Bitcoins in exchange for your local currency.
When you initiate a buying transaction for Bitcoin, it will take you to the exchange and will show you the rate at which you can buy the Bitcoins. You can also sell the Bitcoins in the same manner.
You can check the current prices by different Bitcoin exchanges by going to this link.
The popularity of Bitcoin is increasing day by day. Many people around the globe are actively involved in the trading of Bitcoins. But Bitcoins are not regulated by any government or authorities which make them quite a risker. The future of the Bitcoins is also uncertain because Bitcoins have become the way of money laundering and illegal activities which is a major concern for the governments of the world.