Bitcoin is basically a payment system which is based on the peer to peer mechanism. It is a form of the digital currency which was initially introduced in the financial market as open source software.
Understanding the concept of the bitcoin
The bitcoin first came into vogue in the year 2009. This open source software was initially developed by the pseudonymous developer whose name was Satoshi Nakamoto. Basically, the Bitcoin is a cryptocurrency. The name has been given so because it takes the help of the cryptography so that it can control both the creation of money and then the flow to it. Also, the bitcoin are generally obtained by mining. Also another method of obtaining the bitcoin by making an exchange of the products or services or any other currencies.
There is one more important fact that should be noted. This is when the ‘Bitcoin’ is capitalized, and then it refers to both the technology and the network. But when this term ‘bitcoin’ is written with ‘b’ being written in the lowercase, then here it refers to the currency itself.
In general the bitcoin is a cryptocurrency and is an electronic form of the cash. This type of digital currency is usually decentralized and does not have a central bank to regulate and monitor the flow of digital currency. The transactions are verified through a series of the network of the nodes with the help of the cryptography. Generally the data related to it is recorded in the Blockchain which is basically a public distributed ledger.
How does the bitcoin work?
In this the payments are sent by the users via the digitally signed messages to the various networked where they are willing to make the payment. Here the participants that are involved in the transfer of money through the bitcoins are known as the ‘miners’. Now before making a transaction fort they have to make sure that they have gone through the process of verification. Now when the user verifies oneself as the ‘miner’ they can process with for the timestamp transaction which will go to the shared public database. Now here these shared public databases are known as the ‘block chains’. Now for these Blockchain, the miner is then rewarded with the transaction fees. And along t-with that they also receive the newly minted bitcoin.
The advantages of the bitcoin
- It is quite easy to pay the bitcoin though cell phones. Also one has to while making a payment is to scan the pay and then swipe the card and just enter the pin. And while receiving a payment you just have to display the QR code in the bitcoin wallet app and then the one who is paying can scan the smart phone.
- International payments have become fate and cost effective.
- It helps in protecting your identity and thus avoids any kind of fraud cases.
- Bitcoin are universal so unlike other currencies there are no boundations on it. You can use bitcoin for payment anytime and anywhere.
Thus the bitcoin have revolutionized the world of digital transaction. It has simplified things a lot and on top of it has almost no loopholes for the fraud cases to happen thus making it secure.