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BITCOIN : The Next Big Thing

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 CRYPTOCURRENCY

A cryptocurrency is a form of digital currency that acts as a medium of exchange where individual coin exchanges are stored in one public account called the ledger which exists in a computerized database. As of April 2021, there are over 10,000 different types of cryptocurrency, of which the first one is the bitcoin which we will be talking about today.





BITCOIN

The first type of cryptocurrency was called bitcoin. Bitcoin was created in January 2009. It follows the ideas set out by the mysterious Satoshi Nakamoto who aimed for peer-to-peer transactions without the involvement of any third party. now let's move into the most complicated part: how do bitcoin transactions work?



A brief extract of  what Bitcoin is from their official booklet


How Does It Work?

Bitcoin is a transaction between two people without the interference of any third party like banks and the governments. There is one public account called the ledger. This ledger exists as a copy in every system that is a part of the bitcoin transactions. The people that run and verify the bitcoin transactions are called miners. To make things simple let's take an example. Suppose person A has to send 2 bitcoins to person B. Miners would check if person A actually has 2 bitcoins.

What Is BlockChain?
A bitcoin transaction is a sort of complex equation that requires a computer that has high processing power. Now once it is confirmed, this transaction is added to a chain. A block of the chain gets created. And hence this technology is called "Blockchain".And in exchange for their work miners also get a part of bitcoins. This is called proof of work. The miners have to prove that they had verified and computed the transaction in order to get bitcoins in return.

Bitcoin As An Alternate Currency

Some people use bitcoins as an alternate transaction, while others prefer to invest in it
since Bitcoin has a store of value, like gold. Most people invest in bitcoin
rather than using it as their alternate currency because bitcoin is yet to be
widely accepted by the world. But investing in it also has its risk. those who
are against investing in it say that Bitcoin is a digital currency.

You can't physically touch it(like gold).everything is happening on a supercomputer. As of
2021 bitcoin is still left undiscovered of its potential. You cant currently use
it as a medium of exchange like going to a shop and buying groceries in
exchange for bitcoins. But in western countries, some hotels started accepting bitcoins
from their customers.


Pros and Cons of Bitcoins

Pros-

  • Peer to Peer transactions
  • Elimination of any third party fees (for eg- bank fees)
  • Mobile Payments
  • Low transaction fees for international payments
  • Very accesible

Cons

  • Volatility
  • Threat of Hacking
  • Wallets can be lost
  • No regulations

Should You Invest In Bitcoin?

The value of bitcoin around 10 years ago was literally 0 Rs and today it reached its all-time high of 40 lakhs INR (as of 2021 June) due to which it has been a talk in the market. So by now, you might have guessed that Bitcoins are highly volatile and we can't predict how their value is going. You might also be thinking that how can we even buy one bitcoin that is approximately 40 lakhs INR? The thing is You don't need to buy a bitcoin. You can buy it as fractions of it. So yes it's a great deal to invest in fractions of Bitcoins.


FUN FACT-
A German programmer Stefan Thomas had lost the password of the hard disk containing Bitcoins which was valued at around 220 million Dollars ( 16,03,61,41,000 INR). After 2 more failed attempts, the password will encrypt itself, making the wallet impossible to access.











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