Bitcoin

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Bitcoin

Bitcoin, one name that’s been a phenomenon in the past few months of internet as well as investment pandits. What exactly is this currency? How does it function? How to store it? Why has the price of bitcoin skyrocketed in the past few years? This article tries to answer these questions about bitcoin.

What is Bitcoin?
Bitcoin is a cryptocurrency, that is a currency made of crypto codes (Computer code). In simple terms a crypto code is a computer code that has a monetary value. When you buy a Bitcoin, you don’t actually buy a coin, instead you get a crypto code, that has a value.

These crypto codes are formed by solving difficult mathematical puzzles using high power computers and networks. This process of solving the puzzle is called minting. When a minter (A person who solves the puzzles is called a minter) solves a puzzle he or she gets bitcoin as a reward. Though this process seems simple, in reality it’s a more complex process to understand and mint.

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How does Bitcoin function?
Now that we understood what is a bitcoin, let us understand how does bitcoin transaction works. Bitcoin transactions are done through P2P network, that is pear to pear network. To buy or sell a bitcoin you just need a buyer or a seller, no intermediators like banks or any financial institutions.

Let us understand this through an example, when you have hard cash and you purchase something. The seller gets the cash and gives you the product. The seller then stores the cash given by you in his wallet. Here no intermediators are needed. This is how crypto world functions. You pay cash to buy bitcoins or you pay bitcoins to buy some products. Here instead of sending your money to buyer or seller receives your money or bitcoin directly into his wallet. This is one of the major reasons for governments to oppose bitcoin as a major currency. The transaction made through crypto or bitcoin are not traceable i.e no one knows who sends or receives the crypto.

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There is one major thing to understand about bitcoin transactions. The transactions done with bitcoin get recorded in a public database (Right now blockchain database). This database stores the data of bitcoin transaction, but it stores only the transaction not the sender address and the receiver address. This storage is important to determine the bitcoin you sell or receive.

How to store bitcoins?
As we learned earlier, bitcoins are like hard cash (Crypto codes), it has to be stored somewhere for safety. You can store your bitcoins either in an online wallet or any physical storage device in your possession. Beware bitcoins are like hard cash, if you store it in your physical storage devices, you should be careful not to share it with anyone or someone might access your coins.
Though online wallets are available, it is still not viable method to store bitcoins. Recently a popular bitcoin wallet got hacked and hundred of accounts have been compromised. So, storing bitcoin should be done with at most care.

Exchanges to transact:
Right now, there are hundreds of exchanges to buy or sell bitcoins. You can create an account in any of these exchanges to buy bitcoins. Most of the exchanges ask you to go through ID verification which is must. Once the verification is done, you can bitcoin from interested sellers.

Bitcoin and investment:
Why bitcoin is popular mode of investment? That’s because leading business chains have started accepting Bitcoins for their products, this paves way for Bitcoin to become a prominent currency of internet. If that happens people would do most of their transactions through Bitcoins, as the transactions are not traceable. This in consequence increases the future need for Bitcoins, that’s one major reason for people to invest in Bitcoin.

As of now bitcoin is one popular mode of investment. The recent bitcoin purchase of Tesla for billions of dollar and Elon Musks tweet on bitcoin has kept the bitcoin rates volatile. So, take at most care before investing in bitcoins.

List of Bitcoin exchanges:
WazirX, CoinDCX, Zebpay, Unocoin, Blockchain, Binance, Coinmama, Kraken Note : This is just an informative article not an article on investment in Bitcoins.

– Prakash Parasuraman, Blogger, Ekatha.in

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