Are you familiar with the term cryptocurrency and want to know about what bitcoin is and how it works, you are in the perfect spot. Today, it’s all about bitcoin. What is it and how it works?
Do you know the history of bitcoin back in 2011 when it started, it proved luckiest for many people as they became millionaires with just a hundred dollar in just one night. Since that day, bitcoin has never looked back and its price kept on increasing and at present 1 btc is worth more than $16,000 USD.
What if I tell you that when it started, 10 bit coins were equal to $1 USD? Yes, it’s absolutely correct. So, get ready to know more about what bitcoin actually is and how does it work?
What is Bitcoin?
Bitcoin or btc is a cryptocurrency and the best way you can understand it is like a gold or silver. In older days, when there were no banks, people used metals like gold or silver instead of having lots of paper money.
The concept of bitcoin is similar and it is also used as a form of currency. Just like gold and silver’s value fluctuates, sometimes the price or worth increases and sometimes decreases. Bitcoin works in the same way. But when it started in 2011, it’s worth consistently increased and that’s why today it’s more than $15,000 USD.
The more gold a state have, the more money they can print. Every dollar represented a portion of gold and instead of carrying gold, people carry paper. In simple words, a state cannot print as much money as they want. Printed money should not exceed the gold you have.
United States’ currency (Dollar) became the international currency after Second World War because they had 70% of the world’s gold and hence they can print money accordingly. But United States printed more money than the gold they have and when others countries ask to exchange their gold with the dollars, they said we accidently printed more money. Since then, it is believed by many that paper money is just paper. It has no such value as people in charge can print as much as they want. In 2008, the economy was collapsed just like it did in 1971.
Therefore, people started using cryptocurrency and its concept is quite similar to gold or silver. It’s nothing physical like gold or any other metals. Cryptocurrency is like e-money and it’s just an online currency in the form of bitcoin or any other coin. People can buy it online in exchange of real money and when money is needed, they can withdraw these coins in the form of real currency.
The benefit of cryptocurrency is that there is less chances of getting anyone know about your money. Moreover, your money is safer as compared to real money.
How Bitcoin works?
We hope that now you know about what is bitcoin and cryptocurrency so let’s talk about how it works. Understanding how bitcoin works is not easy task but we will try to keep it as simple as possible so that you can easily understand how bitcoin actually works.
First of all, the technology on which bitcoin works is called blockchain. Blockchain in simple words mean that every transfer or movement or investment of bitcoin is clear and nothing is hidden. This makes it easy to identify if there is any corruption going on, it can be caught easily. We know that internet today has very rare volume of original data and rest is the copied data. Just like this, handling this issue in digital currency is also very tricky as anyone can copy the cryptocurrency and do corruption.
The technology used by bitcoin handles this issue quite perfectly as it saves the entire history of each coin. Once you join the network, the entire history of each coin can be seen. If someone moves bitcoin to any other person or invest in bitcoin, the record is maintained.
Cheating or corruption in this case becomes quite impossible, however we know that loopholes still exists. Now why it is called blockchain? Well, a block collects all the new transactions and every 10 minutes a new block is created and all the blocks are connected. Each block that stores new transaction also keep the previous transactions that ever happened in the network. A block must match not only the history blocks but should also match all other future blocks including the block that is to be created after 10 minutes.
Every block and transaction has an advanced cryptography and when a new block is created, if it matches all the previously added blocks, the cryptography in all of these blocks changes as well. Which makes it even harder to hack or do corruption.
Millions of users and millions of blocks and each block’s cryptography changes when a transaction is made and this makes it very difficult to break because not everyone has this much powerful computer. Another thing you must not forget that the more blocks are created and system grows, the more strong and secure it becomes. Click here and find out whether you should invest in bitcoin or not and what is bitcoin crash.
Final words on Bitcoin
We summarize that bitcoin is a secure cryptocurrency and it works on blockchain technology. Each new transaction creates a new block and once the system gets bigger and bigger, it becomes more secure. The benefit you can get is that instead of having Millions of dollars in your bank you can have few bitcoins. Btc are safe and secure and are not easy to steal. Moreover, when you want to transfer huge amount of money from one country to another, btc is transferred in just 10 minutes as the new block is created. No bank visit! No waiting!
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