What is Bitcoin? -

What is Bitcoin?

By Louis Ligolan | bitcoin, Uncategorized | Comments are Closed | 4 November, 2017 | 0

What is bitcoin, you say? Bitcoin is a digital asset and a cryptocurrency which is produced, held, merchandised, and managed electronically. It is the very first type of money to be categorized as cryptocurrency and no one is in control of it (no middle mans and country tied to it).

Who Created Bitcoin?

Ever wondered who in the world created such an expensive digital currency? He is none other than Satoshi Nakamoto.

Satoshi Nakamoto is a software developer who founded bitcoin and the initial creator of the Original Bitcoin client. He is also the man behind the process of reference implementation which devised the very first blockchain database. During the process, Nakamoto successfully solve the double – spending problem of digital currency.

The creation of bitcoin came from the idea of producing an independent currency of any central authority. He also aimed for a currency that can be transferred electronically and more or less instantly with very low to no transaction fees at all.

Nakamoto is claimed to be living in Japan and was born on April 5, 1975. However, a number of computer science experts and cryptographies from the United States of America and Europe reveal bits of information about him including that the bitcoin creator is only using a pseudonym.

As the creator of bitcoin, it is dated that as of May 24, 2017, Satoshi Nakamoto owns a whopping amount of 1 million bitcoins. Converted to a normal currency, he already has an estimated value of approximately $4 billion as of September 2017.

The true identity and nationality of the bitcoin creator is still unknown up to this day.

The bitcoin development

In line with the creator, bitcoin is created by a digital community of people where anyone is free to join. Bitcoins are “mined” using a computing power in a distributed network. The said network processes the bitcoin transactions making it its own payment platform.

Around November 2008, a paper was posted to a cryptography mailing list. It was titled Bitcoin: A Peer – to – Peer Electronic Cash System under a person named Satoshi Nakamoto. The said paper explained the methods of peer – to – peer network to generate a system of electronic transactions without the need for relying trust.

In January 2009, the bitcoin network release its very first open source bitcoin client and the issuance of the first bitcoin. The creator also successfully “mined” the “genesis block” (the very first block of bitcoins) which has a reward of 50 bitcoins.

During the early days of the release, Nakamoto was estimated to have “mined” 1 million bitcoins. After that, the creator disappeared

What is Bitcoin Based On?

Unlike a normal currency which is based on gold and silver, bitcoin is based on purely mathematics. It is an electronic payment platform that is solely based on mathematical problems.

Across the globe, users are using software programs that follow a mathematical formula to produce bitcoins. The said formula is 100% free of purchase so that anyone who wishes to look at it can check on it.

In addition to that, the said software is an open source which means anyone can take a look at it to make sure that their bitcoin does what its supposed to do.

Who Prints out the Bitcoin Currency?

No one prints out the bitcoin currency. Bitcoins are not printed out like dollars and pesos, this digital currency is produced by people, virtual businesses, operating computers across the globe, and using software platforms that solve mathematical problems.

This cryptocurrency is not physically printed by any central bank of a country. It is purely unaccountable and it makes its own rules and regulations. This means that bitcoin is uncovered by the national and international debt, therefore, it cannot be devalued.

What Sets Bitcoin Apart From Normal Currencies

What sets bitcoin apart from normal currencies is that you can use it to buy things electronically and can be traded digitally.

Not only that, bitcoin is the one and only currency that is decentralized. This means that no central bank or an institution takes hold and controls the bitcoin network. This means that even the most established bank cannot control the bitcoin.

Where and how to acquire bitcoins

Bitcoin exchanges – There are marketplaces called “bitcoin exchanges” allow users to buy and sell bitcoins using different currencies. Go to Mt. Gox, it is the largest bitcoin exchange marketplace.

Transfers – Users can send bitcoin to one another using computers or mobile apps. It is similar to sending online payments.

Mining – Users compete to “mine” bitcoins using their computer to solve complex problems. This is how Satoshi Nakamoto envisioned the creation of bitcoins.

Start mining now because a winner is rewarded with 25 bitcoins for every 10 minutes.

Keeping Bitcoins – Just like a normal currency, bitcoins have also a place to be kept and earn. Bitcoins are stored in a digital wallet/virtual bank which is stored in a cloud or a user’s computer. This allows users to save, send, and receive money and also pay for goods and services online (just like PayPal).

But unlike a normal bank account, the bitcoin bank is not insured by the FDIC.

How and Where to Buy Bitcoins

Sign up for Coinbase

Sign up for a Coinbase account. This will give users a secure place to store their bitcoins. Plus, easy payment methods to convert a local currency to a BTC (bitcoin).

Link it to your bank account

After a successful sign up, connect your Coinbase account to your bank account. Then complete the verification steps before using the account. Once your account is verified you can start a purchase.

Buy and Sell Bitcoins

After you have made your very first purchase, the Coinbase will complete your buy and delivered bitcoin (sells work in a reverse but same way). The value and price of BTC change overtime but the Coinbase shows the current exchange rate before a user can buy and sell it.

The Features of Bitcoin

It is decentralized

The bitcoin network is not controlled by any central authority. Each and every machine that “mines” the bitcoin and processes the transactions makes up a part of the network. This means that no central authority can meddle with its monetary policy which may impose to risks such as taking a user’s bitcoin away from them.

Very easy to set up

Entering the network of bitcoin is just a matter of seconds. Unlike a conventional bank, setting up a bitcoin address does not need any requirements, no questions asked, no payable and transaction fees.

Bitcoin users are unidentified

Bitcoin users are 100% unidentified – anonymous. This gives you the freedom to hold and manage multiple bitcoin addresses which are not linked to any names, addresses, and other personal identifying information.

Bitcoin transactions are transparent

Contrary to the user information, every single bit of bitcoin transaction you make is transparent. This is because the bitcoin stores every single transaction detail in a general ledger called the blockchain. Blame it to the blockchain, it tells it all.

For public bitcoin users, anyone can see how many bitcoins are stored at that particular address. Although they just do not know the identity of the user who owns it.

To make your activities obscure in the blockchain, do not use the same bitcoin address a lot and do not transfer a huge amount of bitcoin to a single address.