What is Bitcoin?
Are you wondering what is Bitcoin? let’s discuss it: Bitcoin is a type of digital currency created and held by electronic means on a computer system. Bitcoins are certainly not paper currencies like INR, USD, EURO, or YEN. Bitcoins do not have centralized banks for regulating financial transactions.
Bitcoins are produced by individuals and business firms across the world using sophisticated computer software that solves mathematical problems. The core idea behind introducing bitcoin was to avoid intermediaries like banks and financial institutions. Bitcoins were introduced in 2009 during the global recession. Bitcoins touched their all-time high in price during December 2017, when 1 bitcoin was worth more than USD 18,000. As of May 2020, 1 bitcoin is worth about USD 8,700.
In today’s extremely cohesive world, commercial activities take place in a business that spans beyond geographic and jurisdictional confines. The business network is intensifying where the market partakers such as buyers, sellers, partners, suppliers, and other stakeholders own, control, and exercise their rights on objects branded as ‘assets’. The assets may be physical assets such as land & building, furniture & fixtures, plant & machinery, or intangible assets such as goodwill, copyrights, and patents, etc. Many of the technologies that we use now in our daily life were quite revolutionary in their time. Think of how mobile phones have changed the way we live today. Now we have smartphones facilitating video conferencing with a person who is sitting in the other corner of the world. It is a revolution in information and communication technology. Similarly, now we are sailing with another revolutionary technology called ‘blockchain’.
How Does Bitcoin Work?
In above as you already got to know about what is bitcoin? Now, lets know about the blockchain mechanism works by recording transactions (known as blocks) on multiple specialized servers across the world, creating a distributed record of business transactions (known as a chain) that can be validated against one another to determine the legitimacy of the transactions. The only possible method to tinker with a blockchain is to break into each server containing a copy of the chain at once which is astonishingly tough for even the sophisticated hacker.
Let us understand the concept of blockchain with a simple and daily life example. Assume that Mr. Ramesh is your close friend. He is travelling from Bangalore to New Delhi. Mr. Ramesh Calls you and says “buddy, I need some money. I am travelling to New Delhi”. You reply, “Sure buddy, sending the money instantly” and hang up the phone. You immediately call your bank manager and request him to transfer Rs 10,000 from your account to Mr. Ramesh’s account. The next moment, the bank manager executes the transaction according to your instructions. You will call Mr. Ramesh and confirm the transaction. Mr. Ramesh expresses his regard for your timely help.
If we can carefully observe this transaction, you and Mr. Ramesh trusted the bank to manage your money. Though there was no real movement of cash, the banker takes the entry in his ledger that neither you nor Mr. Ramesh owns. Nevertheless, to establish trust between two parties, there was a need for a third party (the bank is a third party in this case). Considering the scenario, we may expect there will perhaps be a system where we can still transfer funds with no intervention of third parties and transaction charges. Blockchain technology is an answer to the question. The blockchain technology avoids third parties in the buying and selling transactions.
The blockchain technology was initially used for bitcoin dealings. Though it was often diligently associated with bitcoin transactions, the application of blockchain technology goes beyond cryptocurrencies. This technology is trying to create its footprints in areas such as banking and financial services, digital identity and authentication, commodities market, e-voting, gambling and gaming, data management, network infrastructure, real estate, etc. It is perhaps the major technological innovation of Bitcoin. The blockchain has the potential to alter the way we do business (buy/sell) and the way to verify the genuineness of every business transaction. The blockchain combines the openness of the internet with the safety of cryptography to offer traders and investors a faster, safer, and cost-effective means to validate key data and information and establish trust.
Where to Buy Bitcoin?
Before you start buying bitcoins, you need to understand where and how you can buy this currency. Before you finalize the thought of buying cryptocurrency, check whether the regulation of your country supports you in the buying process. There are different places where you can place your order for cryptocurrency. For example,
- Online exchanges
- Bitcoin ATMs
- Person to person with Voucher cards
Some of the popular exchanges may include
How to Invest in Bitcoin?
The bitcoin on a blockchain can be bought with three simple steps as shown below:
- The first step in the process of buying bitcoin on the blockchain is creating a blockchain wallet. To create your blockchain wallet, you would require your verifiable email id which becomes a reference point for later stages of your transactions.
- In the next step, you would have to set-up an exchange account using your email account through which you accessed the bitcoin sellers. You can set up your exchange account with one of the listed exchange partners with the company.
- As soon as you register with the exchange partner, then you are ready to invest in blockchain.
On a serious note, blockchain also has potential security threats. Serious concerns can rise against the blockchain concept, especially with regards to trust and who is responsible should a problem arise. It is also under the radar of the regulatory authorities in many countries. It will take some time, a strong performance record, for it to make a meaningful contribution to the digital world. But as a new technology, it has a long way to go and yet to earn that trust from the users.
Hope, you got to know more about what is bitcoin, how does bitcoin work, how to invest in bitcoin, where to buy bitcoin, how to purchase bitcoin, how to make money with bitcoin and how to pay with bitcoin
Feel free to share your thoughts and queries in the comment section
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