BITCOIN-EVERYTHING YOU WANT TO KNOW
Today we are living in a digital world. So, digital currencies are pretty much common in use. This article ‘Bitcoin- Everything you want to know ‘ will give you a complete knowledge about it.
WHAT IS A BITCOIN
Bitcoin is a type of Crypto Currency which is virtual in nature and is independent from traditional banking system and came into circulation in 2009.
Top experts and traders predict that, Bitcoin is considered as the best known digital currency.
It relies on computer networks to resolve complex mathematical problems, in order to confirm and record the particulars of each and every transaction.
Its exchange rate does not depend on the central banks regulations and there is no single authority that governs the supply and management of Bitcoin.
The value of Bitcoin depends on the users confidence and its demand all over the world.
HISTORY OF BITCOIN
Its creator was a nameless group of bright mathematicians (using the fabricated name Satoshi Nakamoto) who designed and developed it in 2008 to be “virtual gold”.
The first Bitcoin software released in early 2009 during the USA economic crisis.
They knew that to have lasting value, like gold it had to have a finite supply and so they give capping on production of Bitcoin.
So during creation they capped the supply at 21 million Bitcoins.
On 31 October 2008, a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted by the author name Satoshi Nakamoto.
Satoshi Nakamoto implemented the bitcoin software and released it in January 2009 for use by others.
On 3 January 2009, the bitcoin system was created when Satoshi Nakamoto mined the first block chain of bitcoin, known as the genesis block.
UNIT OF MEASUREMENT
The unit of account of the bitcoin system is a bitcoin.
Symbols generally used for expression of bitcoin are BTC and XBT.
Millibitcoin (mBTC), and Satoshi (sat) are the two small amounts of bitcoin used as alternative units.
A satoshi is the smallest amount within bitcoin representing 0.00000001 bitcoins, that is equal to one hundred millionth of a bitcoin.
A milli-bitcoin equals to 0.001 bitcoin.
One thousandth of a bitcoin or 100,000 Satoshi.
CURRENT STATUS OF BITCOIN
In 2014, We expect exponential growth in the popularity of it around the world with both merchants and consumers using this virtual coin.
India has already been cited as the next likely popular market that Bitcoin could move into.
It’s growth in 2014 on wards is due to various Bitcoin ATM’s, mobile apps, new technologies and tools implemented in this field.
Recent Bitcoin price collapse due to Covid-19 case:
According to Coin Metrics and Forbes, on 11 March 281,000 bitcoins were sold by owners who held them for only thirty days or more.
This compared around 4000 bitcoins that had laid inactive for a year or more indicating that the vast majority of the bitcoin volatility on that day was from recent buyers.
During the second week of March 2020 as a result of the COVID-19 pandemic Crypto currency exchange Kraken experienced an 80% increase in the amount of account signups over the week of bitcoin’s price collapse.
This was due to after effects of buyers looking to capitalize on the low price.
It’s exchange rate with USD is a strictly watched.
Benchmark of it is carried out on a daily basis and long term over the last 8 years since its introduction to the world’s financial marketplace.
A popular company to receive the most current rate in Bitcoin valuation is XE.
They show Bitcoin to USD valuation and also the complete its price chart.The Bitcoin value chart and the Bitcoin to USD chart.
If you ask, “How much is one Bitcoin?” you will always know from their continuously updated charts.
In INDIA 01 bitcoin is equals to Rupees 687447.43 approximately.
As of 2020, about 18 Million of it in subsistence and were in market. However, you can not use all of them.
Out of the mined Bitcoins of 18 million, roughly 4 million are lost.
Another 1 million were stolen in various hacks and heists such as that of through Mt. Gox.
Now we are having only 13 million of it for use by remaining people. Also “Whales”! (Whales are people who own a huge number of bitcoins) stashed away a huge number of Bitcoins in their wallets.
Among these whales is the founder of it, Satoshi Nakomoto, who might have about 1 million bitcoins which are roughly worth 10 billion US dollars at present cost.
HOW TO INVEST IN BITCOIN
A question that frequently comes in our mind that “How to buy its stock”. By far the most common way to proceed in this area is to buy it directly and not its stock.
There is one entity called Bitcoin Investment trust which is an investment fund that is designed to track the market flow of it.
Some analysts however are calling this a risky way to become involved in this marketplace.
It’s predictable value is a subject frequently discussed by various investment giants.
In January of 2015 the price of one bitcoin was $215. Currently it is around $8000.
This is an exceptional increase and one far beyond what most experts would have projected at that time.
Currently different reviews are there regarding its value.
In reviewing forecasts from experts all over the world, a common answer seems to be that the top value will settle in at around $10,000.
Some experts also have an opinion that its projected a value reaching $100,000 in future.
One must know what a Bitcoin wallet is and how to use it.
A Bitcoin wallet is defined as something that “stores the digital credentials for your bitcoin holdings” and allows its owners to access and spend them online.
It is simply the Bitcoin account comparable to a bank account.
It allows you to get Bitcoins, stock up them and drive them to others. What it does is store a compilation of Bitcoin privacy keys.
Usually it is encrypted with a password or otherwise protected from unauthorized access.
There are several modes on which wallets can operate and drive.
There are two types of relationship with regards to trust and computational requirements.
- Full clients verify transactions directly by downloading a full copy of the block chain (A full copy of block chains is over 150 GB as of January 2018).
- It is the safest and reliable way of using the network, as trust in external parties is not required.
- They regularly check the validity of mined blocks, and preventing them from transacting on a chain that breaks or alters network rules suggested for it.
- Because of its size and complexity, downloading and verifying the entire block chain is not suitable for all computing devices and high end GPU’s and servers are required for this.
- Lightweight clients consult full clients to send and receive transactions without requiring a local copy of the entire block chain also known as SPV (Simplified payment verification).
- These accounts are quicker to set up and allows them to be used on very less power, less bandwidth devices such as smart mobiles and normal PC.
- When using a lightweight wallet, however, the user must trust the server and online wallet providers.
- They follow the longest block chain and do not have to ensure its validity.
- They also have to trust the miners.
There are several types of digital wallets to choose from.
This type of wallet allows you to send, receive and store Bitcoin though your web browser.
In this type of wallet, generally wallet software is stored directly on your computer/PC /Laptop desktop.
This type of wallets are designed to use in Mobile devices by users.
HOW TO GENERATE INCOME FROM BITCOIN
Unlike other currencies, there are three ways to make money with it.
Saving, trading and mining are the three ways of generating income from it.
In savings income generation through Bitcoins, you have to purchase some bitcoins and save it for some time.
After that when its value increases you can make profit and generate income from that.
It can be traded on open markets, which means you can buy Bitcoin in low value and sell them in high value. With this you can make a profit from it’s trading.
Mining is a very time, money and power consuming process.
Mining is a type of record keeping service done all the way through the use of high end computers and servers.
Miners keep the block chain steady, complete, and unalterable by repeatedly grouping newly broadcast transactions into a block.
After that it broadcasts to the network and verified by recipient nodes.
After that each block contains cryptographic hash of the previous block, thus connecting it to the previous block and the block chain is named after that.
To be acknowledged by the rest of the network, a new block must contain a proof-of-work (PoW).
The system generally used in this process is based on Adam Back’s 1997 anti-spam scheme known as Hash cash.
The PoW requires miners to find a number called a nonce.
When the block content is hashed along with the nonce, the result is numerically smaller than the network’s difficulty target.
This proof is easy for any node in the network to verify, but extremely time-consuming to generate.
As for a secure cryptographic hash, miners must try many different nonce values.
About 2,000 blocks takes approximately 14 days approximately. And roughly it takes around 10 min per block to verify.
The difficulty target is adjusted based on the network’s recent performance, with the aim of keeping the average time between new blocks at ten minutes.
Between March 2014 and March 2015, the regular number of nonce’s miners had to try before creating a new block increased from 16 quintillion to 200 quintillion.
The proof-of-work system, alongside the chaining of blocks, makes modifications of the block chain extremely difficult and time consuming.
An attacker has to modify all subsequent blocks in order to modify one block to be accepted.
As new blocks are mined all the time, the difficulty of modifying a block increases day by day. As time passes and the number of subsequent nonce’s increase it is getting more and more difficult.
FRAUDS IN BITCOIN
RECENT TWITTER BITCOIN SCAM
On July 15 this year (2020), a number of high-profile Twitter accounts, each with millions of followers, were compromised in a cyber attack to encourage scam on bitcoin.
The scam asked account holders to send bitcoin currency to a specific Crypto currency wallet, with a promise that money sent to it will be doubled and returned.
The perpetrators had gained right of entry to Twitter’s administrative tools so that they could modify the accounts themselves and post the tweets straight to the users.
The path is not sure but they are supposed to have gained access either through paying off Twitter employees a ambit amount of money to use the tool.
Also they might have used a compromised employee’s account to access the tool directly.
More than 12 bitcoins were sent to one of the addresses involved, the equivalent of more than US$110,000.
Minutes after the tweets were posted, more than 320 transactions had already taken place on one of the wallet addresses.
EARLIER FRAUDS IN INDIA:
A tech guy named Amit Bhardwaj arrested by Delhi police at Delhi airport when he was trying to escape out of country after a Rs 2000 crore fraud in Bitcoin.
About 8000 peoples were fallen into his trap of opening Bitcoin accounts and wallets.
This happens due to no regulatory authority of Bitcoin.
Many frauds and scams you can notice in Bitcoin transactions. So be careful at the time of Bitcoin investment.
ADVANTAGES AND DISADVANTAGES:
ADVANTAGES OF IT:
LOW INFLATION RISK:
One of the benefits of Bitcoin is its low inflation risk.
Traditional currencies undergo inflation and deflation around the year or decade. They have a tendency to lose their purchasing power each year.
As governments continue stimulate the economy by injecting stimulus packages from reserve money.
Bitcoin doesn’t suffer from low inflation, because Bitcoin mining is restricted to just 21 million units.
That means the release of new Bitcoins is slowing down and the full amount will be mined out within the next couple of decades.
Experts have predicted that the last Bitcoin will be mined by 2050.
LOW RISK OF COLLAPSE:
Bitcoin has a low risk of collapse dissimilar traditional currencies that rely on governments and central banks.
When currencies collapse, it leads to hyperinflation. In hyper inflation you will have to give a lot of money to buy one small thing.
During hyper inflation your whole savings account can be wipeout in an instant.
Bitcoin on the other hand have low risk of collapse as its exchange rate is not regulated by any government plus is a digital currency available worldwide.
EASY TO CARRY:
Bitcoin is easy to carry and easy to transfer.
A billion dollars in the Bitcoin can be stored on a pendrive and placed in one’s pocket. It is also very easy to transport Bitcoins as compared to regular paper money.
DISADVANTAGE OF IT:
One disadvantage of Bitcoin is its untraceability nature.
As Governments and other organisations cannot trace the source of your funds.
So that it can attract some deceitful individuals and online hacking your money transactions might happen.
THE FUTURE OF BITCOIN
Bitcoin mechanism works, but critics have believed that the digital currency is not ready to be used by the mainstream because of its volatility.
They also point to the hacking of the Bitcoin exchange in the past that has resulted in the loss of several millions of dollars.
Supporters of digital currencies have said that there are newer exchanges that are supervised by financial experts and venture capitalists.
Experts further added that there is still anticipate for the virtual currency system and the predicted growth is gigantic.
When the major companies will accept Bitcoin as a method of payment, the more successful Bitcoin will become in future.
So this is all about Bitcoins and How you can invest and make money from it.
Definitely this article ‘Bitcoin-Everything you want to know ” increase your knowledge on it and Crypto currency.
You like it or not this is part of our digital virtual currency today and will remain with us in future.
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