Introduction to Bitcoins

Introduction to Bitcoins

Bitcoin – the virtual banking currency of the INTERNET – has existed for several years  but become more popular in the recent years ,now and many people have questions about them. Who created it? Where do they come from? Are they legal? What makes it different from normal currencies?  We’ve got the answers to those questions and more.

What Are Bitcoins?

Bitcoins are electronic currency, otherwise known as cryptocurrency. Bitcoins are a form of digital public money that is created by hard working  mathematical computations and policed by millions of computer users called ‘miners’. Bitcoins are, in essence, electricity converted into long strings of code that have money value.

Who created it?

It was created by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009.which was an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees.

What makes it different from normal currencies?

Bitcoin can be used to buy things electronically. In that sense, it’s like conventional dollars, euro’s or rupees, which are also traded digitally.

However, bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.

How are bitcoins created?

New bitcoins are generated by a competitive and decentralized process called “Mining”. This process involves that individuals are rewarded by the network for their services. Bitcoin miners are processing transactions and securing the network using specialized hardware and are collecting new bitcoins in exchange.

What is Bitcoin mining?

Mining is the process of spending computing power to process transactions, secure the network, and keep everyone in the system synchronized together. It can be perceived like the Bitcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network. This process is referred to as “mining” as an analogy to gold mining because it is also a temporary mechanism used to issue new bitcoins. Unlike gold mining, however, Bitcoin mining provides a reward in exchange for useful services required to operate a secure payment network. Mining will still be required after the last bitcoin is issued.

What determines bitcoin’s price?

The price of a bitcoin is determined by supply and demand. When demand for bitcoins increases, the price increases, and when demand falls, the price falls. There is only a limited number of bitcoins in circulation and new bitcoins are created at a predictable and decreasing rate, which means that demand must follow this level of inflation to keep the price stable. Because bitcoin is still a relatively small market compared to what it could be, it doesn’t take significant amounts of money to move the market price up or down, and thus the price of a bitcoin is still very volatile.

bitcoin

To check latest price of bitcoins here

Is bitcoins are legal

Yes , bitcoins are legal in many countries. And many big companies are using it. Coming to India , Government of India has declared that usage of bit coins are legal but and fruad happens with the bitcoins we are not responsible and don’t file a complaint against it. Because bitcoins are almost impossible to track.

And there a few companies who sell and buy bitcoins in India.

To make purchase or sell bitcoins  here

Why hacker’s demand money in bitcoins

One of the greatest power of the bitcoin is the ability to stay anonymous. Criminals and hackers have been associated with bitcoins since its inception.  Bitcoins use blockchain technology which helps you stay anonymous and can be manipulated in a very secure way.

While every bitcoin records the digital address of every bitcoin wallet it touches, the bitcoin system does NOT record the names of the individuals who own wallets. In practical terms, this means that every bitcoin transaction is digitally confirmed but is completely anonymous at the same time.

ransomware-2

Reference:  wikipedia , Official Bitcoin, Google.

 

Advertisements

2 thoughts on “Introduction to Bitcoins

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s