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Tuesday, November 28, 2017
Bitcoin a Cryptocurrency
What is Bitcoin or Crypto-Currency
a form of digital currency or virtual currency having no physical existence.
Bitcoin was invented by Satoshi Nakamoto. It is still not known whether he or
she is one person or group of people. Bitcoin was released as open-source
software in 2009. Bitcoin is called as crypto-currency because cryptography has
been used to code its value to ensure maximum security.
18th August 2008 -The domain bitcoin.org was registered. Today, this
domain is “whoisguard protected”, meaning the identity of the person who
registered is not public information.
08th January 2009 – The first version of the Bitcoin
software is announced on the Cryptography mailing list.
09th January 2009- First Block is mined.
Bitcoin uses peer-to-peer
technology to operate with no central authority or bank. Bitcoin is stored in
blockchain worldwide. People are being rewarded few bit coins for verifying the
Value (in Indian Rupee)-
In 2016, it was reported that approximately 14 million
wallets are in use. Ethereum, another crypto currency similar to Bitcoin has
little over a million wallets.
currency is digital or virtual therefore can be transferred anywhere using software
over the Internet. Thousands of people are working as miners to verify ach
transaction. Miners need to solve the mathematical problem and in return they
are being rewarded some bitcoins.
number of wallets-
A user can have as many wallets as
he or she wishes.
Bitcoins are being used to buy
illegal things like drugs, weapons, money laundering, tax avoidance . Cyber
criminals used cryptocurrency as preferred mode of payment to receive ransom.
But best part is that each transaction can be traced. Therefore Bitcoins are Pseudonymous
BlockChain- is permanent database of Bitcoin Addresses.
Is the up-to-date part of blockchain which records each and every transaction
and all blocks are chained together. Each block is linked to every other in
chronological order. Each block has hash of its predecessor.
BTC is the abbreviated version of Bitcoin, similar to USD in traditional
A wallet stores all the necessary information to transact
bitcoins. Bitcoin uses public key cryptography, a wallet is collection of these
numbers are public keys of a specific asymmetric encryption system.
Account ownership is established by knowing the corresponding private key.
If Private key is lost-
The Bitcoin network will not
recognize any other evidence of ownership; the coins are then unusable, thus
lost. In 2013, one user claimed to have lost 7,500 Bitcoins, worth $7.5 million
at that time, when he accidently discarded a hard drive containing his private
Backup your Wallet always.
— To download wallet-
Blockchain is database of every transaction that has ever
taken place. Blocks are data structures encapsulating transactions as well as a
reference to the previous block, therefore forming a chain of blocks.
Drawback- Is blockchain’s size, it is getting
bigger and bigger to record all the transactions which are taking place
worldwide. This leads to synchronization problems as new block appears in the
blockchain every ten minutes.
accepting Bitcoins- To name a few:
Bitcoin is pseudonymous, meaning
that funds are not tied to real world entities but rather Bitcoin addresses.
Owners of Bitcoin addresses are not explicitly identified, but all transactions
on the blockchain are public.
In the absence of a central
authority, crypto-currencies are created by a process called “mining”- usually
the performance of a large number of computations to solve a crypto-graphic” puzzle”.
Bitcoin mining is the process of
adding transaction records to Bitcoin’s public ledger of past transactions or
blockchain. This ledger of past transactions is called as blockchain as it is a
chain of blocks. The block chain serves to confirm the transactions to the rest
of the network.
Bitcoin nodes use the block chain to
distinguish legitimate Bitcoin transactions from attempts to re-spend bitcoins
that have already been spent elsewhere.
Disclaimer- Kindly don’t post any defamatory, infringing, obscene,
indecent, discriminatory or unlawful material or information.