What is Bitcoin?
Bitcoin was the first of what have become known as “cryptocurencies”.
These are forms of digital money that use encryption to secure transactions and control the creation of new units.
The plan was to make a form of currency not controlled by governments or businesses, that you could trade globally with no cost and without having to reveal your identity.
The popularity of Bitcoin has spawned many copycats – sometimes called “altcoins”.
To make things more confusing, there are also “second generation” virtual currencies like Ethereum and Bitcoin Cash.
Is Bitcoin Money?
Bitcoin is a cryptocurrency which was started back in 2009. When Bitcoin was created in 2009, it was started as a way to decrease the overall cost of the transaction fee than traditional online payment methods. It was started by an anonymous person/group known as Satoshi Nakamoto. The first bitcoins were launched in a block of 50 which is known as the Genesis chain.
What is Money?
Money is a medium of exchange for goods, services, information etc. With online banking and credit cards usage increasing day by day, the concept of money can be really close to that OF BITCOIN. A 100 dollar bill has its value because the Government backs it up. The money you store in the bank doesn’t change its value.
Nowadays people don’t really handle any real cash, their salary is credited directly to their bank accounts and usually, all the bills are paid through cheques or online transactions.
To say bitcoin is money is not totally wrong but there are many other factors involved which makes bitcoin more than just money.
How does Bitcoin value change?
Since the creation of Genesis block, all the bitcoin transactions are recorded as a public ledger. These transactions are logged in encrypted in form of “blocks”. These “blocks” contains complete data containing all the details of the transactions made through bitcoins from the very beginning. These blocks form a blockchain which is like a public ledger. When a Miner solves the complex mathematical problem from the previous transaction, he gets a reward in forms of Digital currency which is the first hash for the next block. The amount of new bitcoin released with each mining block is known as block reward. The rate at which these rewards are released keeps diminishing every four years.
What determines their value?
Like many things, it comes down to supply and demand.
New Bitcoins are released at a rate of about 25 new coins every 10 minutes.
But the flow will dry up as they have been designed to ensure that no more than 21 million will ever exist. Today, around 16 million are in use.
How is Bitcoin transferred?
For storing cryptocurrency there are various wallets present in the market which are necessary. Cryptocurrency wallets are software programs which are used to store your public and private keys which are interfaced with various block chains this enables users to send and receive cryptocurrency and monitor your balance. Unlike traditional “pocket” wallets these digital wallets don’t store currency in one location or exist in any physical form, all that exists are the records of permanent transactions made through cryptocurrency. when someone trade digital currency they are basically signing off ownership of the coins to your wallet address, they send private and public key for the transaction if the private and the public key matches, the balance in sender’s account will decrease and the receiver will get ownership of those coins.
How to mine
Mining is a tricky process that involves solving a complex maths problem that takes both time and computing power. The more powerful your computer (and thus, the quicker you can crunch the numbers) means a more difficult problem.
Custom-built Bitcoin mining hardware and software is now available, allowing miners to find Bitcoins even faster.
Each miner also solves a dual function as they process and secure transactions on the block chain. But the more miners that join, the harder it becomes to find Bitcoins.