Bitcoin:The revolution in Cryptocurrency

With all the recent talks about bitcoins and their growing popularity,I decided to figure out what this Bitcoin actually is.How is it made? How to use? Pros and Cons...all of these explained in the simplest way. Bitcoin is the first form of decentralised crypto currency for online payments,meaning none of the transactions are governed by any central authority/bank. You can pay a bitcoin to your friend and there's no bank to go through to make that transaction, just a peer-to-peer networked program on your computer. The technology behind this wonderful cryptocurrency-Blockchain. It’s more of a public ledger(register) which keeps track of each and every single transaction.Who was the sender,to whom did he send,what is the final balance in everyone’s account etc. This ledger is visible to all those part of that network.

Another interesting concept here is the method of making bitcoins.Its called ‘mining’. All recent transactions made are bundled into a ‘block’ finalised every 10 minutes.For the transaction to be verified by a miner,his computer has to solve some complex mathematical equations pertaining to it.The person solving it first will get the award for it.

So,simultaneously the transactions are being verified securely and the hardworking miners are being gifted. Also the miners may charge a transaction fee for themselves.So the transactions offering more fee might be solved first by a miner.The transaction fees are damn less though. Since anything digital can be reused,copied,sent to multiple people,the hard part about implementing a digital payment system is making sure that nobody spends the same money more than once This problem isn’t there for bitcoins as for the Blockchain,when you send a coin to the other person,all the remaining computers reach a consensus that a coin has been exchanged.From X to Y. Person X has no more claim on it. Sadly the true founder of Bitcoin isn’t known till date. It’s under a mysterious pseudonym of “Satoshi Nakamoto”. No one even knows whether this is a man/woman/group of individuals.This concept was randomly found as a working paper somewhere without any proper identity.

Coming to the transaction part of bitcoins, we saw that miners are rewarded with them.What about the common man? How does he get bitcoins?Simple. We can exchange local currencies for bitcoins too.There are certain organisations for them Supposing that 1 bitcoin values ₹4 lakh. You needn’t necessarily have atleast 4lakhs to participate in a transaction. Just like how 1₹=100p,we have 1 bitcoin=(10^8) satoshi. Meaning you can even transact if you have less than a Paisa. Talking about how to send and store a bitcoin,you have a digital wallet for it like PayTM. Every operator requires a private,public key.Private key is highly confidential,it’s a password to unlock your wallet. Public key is like your account number . The sender must know the public key of opposite person.These keys are within themselves a long string of letters,numbers. Due to the way Bitcoin was coded, there is a limit of just under 21 million bitcoins that can be created. For every four years,the number of bitcoins generated per block halves.Meaning a geometric progression that’s eventually gonna end at 21million.Once the limit is reached, no more bitcoins can be made.It is expected to end by 2140. This Bitcoin has evolved a lot since their inception and is now at inflection point(significant change). Where once a single bitcoin was worth a few cents it is now worth about $9,200 per coin (November 2017), creating millionaires in the process.

The Bitcoin system has some imperfections and weak points that can be exploited by sophisticated hackers looking to steal Bitcoin for their own use. Dark web marketplaces – online, international black markets whose users buy and sell illicit substances, stolen goods, and prohibited services – are the best examples .

For all its promise, Bitcoin remains a niche currency that’s subject to wild value fluctuations. Despite the wild-eyed pronouncements of hardcore proponents, it’s certainly not a legitimate investment or trading vehicle, as is the case with stable national currencies. Have to wait and see what does the future of Bitcoins look like.