BITCOIN: Feature, Origin and Working
Bitcoins, as the name indicates, are digital currencies that can be used in all types of transactions.
They are known as Cryptocurrency, i.e., currencies that are created using encrypted codes.
A person can buy and sell Bitcoins through digital platforms.
The idea of this Cryptocurrency was first introduced in 2009 by a single person or by a group of people under the pseudo name Satoshi Nakamoto. Actually, the identity of them is unknown to all.
As compare to credit card and other online transactions, Bitcoins offer comparatively lesser transaction fees. Bitcoins are not under centralized or government authorities. This Cryptocurrency is not tangible other than physical money. Transaction balances are retained as a public ledger in which each individual has translucent access. All Bitcoin transactions – are closely checked by an immense amount of computing command. Bitcoins are not distributed or supported by any banks or any financial institutions. They cannot be counted as valuable as a product or commodity. Following official app, various virtual currencies are introduced in the market, referred to as Altcoins.
How it is working
Bitcoin uses a network of computers for its functioning. The computers, which are known as nodes, are used in creating and function various codes. Thus they can store the Blockchain. The Blockchain is the key part of this process. It contains a number of blocks. These blocks are a group of transactions. This Cryptocurrency uses mathematical encrypted keys for its smooth functioning. There is a public key, as well as a private key.
The public key as the name indicates the key which is open to the public, and anyone can send Bitcoins using this key. On their and, the private key is the one which is similar to our ATM Pin number that is kept secret in order to safeguard our account.
As stated earlier al the Bitcoin transactions are facilitated through the Blockchain. All these computer systems that take part in the functioning of the Blockchain have an identical list of blocks and connections. So, every each and every new Bitcoin transaction is very much transparent as these computers can recognize when new blocks getting occupied with new Bitcoin transactions. Thus, any fraudulent activities can be prevented. Anybody, if they run nodes or not, can watch all the transactions live. If any hacker or a bad actor who is planning for any deceitful act, have to almost 51% of the computing power that is used to set up the Bitcoin. Bitcoin consists of around 47,000 nodes as per May 2020, and this keeps larger day by day. So, a hacker cannot easily plan for an attack.
If there is any suspicious activity takes place, all the nodes or the individuals who are working in the network of Bitcoin can easily and securely switch to a new blockchain and thus made the efforts by the hackers in vain.
Bitcoin is one of the earliest digital currencies which make use of peer-to-peer technology to enable instantaneous payments. The individuals and companies who are working behind this Cryptocurrency are of autonomous nature. These people or companies who are managing the computing power behind Bitcoin consists of nodes or miners. Miners are the individuals who start and proceed with all the transactions on the Blockchain. They are encouraged by rewards and transaction fees remunerated in the form of bitcoin. These miners are a part of a decentralized body which ensures the credibility of this Cryptocurrency network. Fresh bitcoin is being awarded to the miners at a permanent but intermittently deteriorating rate, in such a way that the supply of bitcoins altogether touches approaches 21 million.
Areas of concern
Though this currency creates a digital platform for easy and hassles free transaction of money, its anonymous nature also made it suspicious in the eyes of many people as well as organizations.
Many Asian countries, as well as European countries, are planning to bring some regulations for Bitcoins. As there is no centralized institution or a governing body for this virtual money, many people are not willing to take high risks. According to Cybersecurity Carbon Black, Bitcoin worth 1.1 billion gets stolen in the year 2018.
Amidst all these confusions and tensions, we hope that the Cryptocurrency will attain a safer place in the digital market.
Photo: David Shares, Unsplash