Bitcoin-A Cryptocurrency Taking Over The World By Storm

Ever heard your geek friend go on and on about this fancy new currency only he knows of? Well, not anymore. This piece here is intended to save you from that same embarrassment.

 

So Bitcoin , a new currency that was created by a person or a group of persons using the alias Satoshi Nakamoto in 2009, is the only decentralized currency in the  world. Now ,what does decentralized mean? It means there are no middle men,no banks,no countries, no transaction fees to pay for(not exactly zero but way less than what banks now charge). Decentralized is not the only property unique about bitcoins ,it protects your Privacy too.All the transactions using bitcoins are anonymous.Considering the age we live in, ability to spend our money privately without any government peeking in is in itself a USP for the increased use of bitcoin. There are a lot more features to this money which we will be discussing separately in the later part. Decentralized only makes it a revolutionary currency of some sort . Many people have lauded this idea with such praise, out of them one which stands out is by Nassim Taleb, the author of the black swan. His words were 

 "Bitcoin is the beginning of something great: A currency without a government, something necessary and imperative."

 What is this Decentralized Currency?

The entire bitcoin system works on a peer-to-peer basis,meaning there is no central authority controlling it. It can be passed on in circulation like normal currency with the only difference being that it is not being tracked by some government or bank.Creation of the currency is done using Cryptography.With no one tracking it, it's safe to assume it is prone to the danger of double spending but it's way ahead and uses its own system of blockchain to keep record of every transaction and track issuance of the currency. Cryptography not only ensures the creation but ensures the transactions are as safe as physical money transaction and an anonymity cover over it. The beauty of visible to the public in a ledger,still your anonymity is maintained as only your addresses are disclosed rather than names ,which is not the case with bank transactions and other e-wallet transactions.

Why use bitcoins for business?

Apart from the privacy cover, bitcoins can make international payments hassle-free and cheap as it is not bound by any country or subjected to regulations. Upcoming and small scale businesses go for bitcoins as there are no credit card charges. Other than these reasons many people even buy bitcoins hoping that their value will go up.

How to get your hands on bitcoin?

There are a lot of "bitcoin exchanges" where people are allowed to buy and sell bitcoins using different currencies. Mt. Gox is the largest of such exchanges. You can also earn some coins by mining that is by investing in hardware and software. The better the encryption technology you are using  ,more the chances of you getting coins. Also, people can send you bitcoins too.That is the similar way digital cash is sent using mobile apps or computers.

What is bitcoin Mining?

This is the process by which new bitcoins are generated. What you have to do as part of mining is solve some complex math puzzle making the blockchain secure in the process. The difficulty of the puzzle is hard enough to make it time-consuming and tough. Currently, every 10 minutes,some earns 25 bitcoins. Also you cannot earn bitcoins forever by mining as the amount of bitcoins is regulated by the blockchain which is designed such that a maximum of only 21 million bitcoins can be produced and in circulation,estimates suggest that the last bitcoin mined will be in the year 2040. 

Where is bitcoin stored?

Same as digital cash,bitcoins are also stored in wallets. These wallets are either on the cloud or at your computer.This is one of the points where the bitcoin lags behind as it does not insure these wallets with FDIC which means an online server hack or a virus attack on your computer can easily cost you big.

How much is a bitcoin worth today?

At today's rate, a single bitcoin is worth $4381.24( 280289.83 INR). Predictions suggest it'll be 500000$ by the year 2030.This is why ,as we saw above,people are using bitcoins as an investment option too rather than just another currency.

The Anonymity Threat

As we saw earlier ,one of the boons of this system-Anonymity,actually pays off as a bane too.Because all the purchases are anonymous ,most of the shopping done is of illegal drugs and other illicit activities,which in turn makes a large part of the existing marketplace to hover away from adopting this currency.

The Future of Bitcoin

Even though we are moving day-by-day towards a digital economy still a question lies over the future of bitcoins. The bitcoin may even be regulated as governments of the world grow restless daily with taxation and the growth of such an unregulated currency.