Nowadays Bitcoin is a trending topic. We’re damn sure that you must have heard about Bitcoins somewhere and you were very curious about it. And you search all over the internet for Bitcoin. Bitcoin is kind of a complex concept for non-technical people. But don’t worry, your search ends here because we’ll give you the easiest explanation for Bitcoin.
Bitcoins were invented by an unknown programmer Satoshi Nakamoto in 2009. It’s a virtual currency. It means Bitcoin does not exist practically. It is just a widely accepted digital currency. The best thing about Bitcoin is it’s a decentralized currency and is an open source software. It means there is no specific bank or government which runs Bitcoin. However, there are some pre-specified rules, which all the people using Bitcoins should follow.
As mentioned earlier, Bitcoin is a decentralized currency. So how do Bitcoins work, you ask?
The Bitcoin system where Bitcoins are kept virtually is known as a ‘Wallet’.
Now suppose you have 5 Bitcoins and your friend has 0 Bitcoins. You sent 5 Bitcoins to your friend. So by very simple mathematics, 5 Bitcoins will be deducted from your wallet and the same 5 Bitcoins will be added to your friend’s wallet. You will now be left with 0 Bitcoins and your friend will have 5 Bitcoins. But since there is no bank to verify your transaction, what proof do you have of sending those 5 Bitcoins to your friend? Or what proof your friend has of receiving 5 Bitcoins? Here comes the concept of the blockchain.
The blockchain is simply a proof that you sent Bitcoins to your friend and your friend received Bitcoins. Each Bitcoin transaction has some encrypted code. When you start the process of transferring Bitcoins to your friend your encrypted data is sent to all of the other Bitcoin users which are mining. Wait, mining? I will tell you about mining in a minute. For now, miners are just those people who verify your transaction.
So after the miners verify your transaction, your transaction will be recorded in a publicly distributed ledger. And this publicly distributed ledger is known as Blockchain! The blockchain is visible to all of the Bitcoin users. But they won’t be able to see who sent the bitcoin and who received it. They can only see the record that someone sent money to another person.
Now again back to mining. As we mentioned before, miners are those people who verify your transaction. But these miners don’t actually do anything. Verification is just a kind of mathematical problem which is solved by computers of miners. But what is the profit of miners in it? Miners earn bitcoins for a verification process. There are a lot of miners available, so there is competition between miners. Miners whose computer has the fast processing speed can verify the transaction faster. So the faster your computer is, the more you earn from mining.
You can create your Bitcoin wallet for free from the Official website of bitcoin. You can simply convert your country’s currency such as USD, EUR, INR, etc into bitcoins. The other option is to earn Bitcoins via mining.
Bitcoin rates (as of 9th Dec 2017)
1 Bitcoin = 15651.02 USD
1 Bitcoin = 13367.30 EUR
1 Bitcoin = 1014847.31 INR
Bitcoin is illegal in Bolivia, Ecuador, Kyrgyzstan, Bangladesh, Morocco, and Nepal.
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