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What is Bitcoin?

There are a number of currencies in this world used for trading amenities. Rupee, Dollar, Pound Euro, and Yen are some of them. These are printed currencies and coins and you might be having one of these in your wallet. But bitcoin is a currency you can not touch, you can not see but you can efficiently use it to trade amenities. It is an electronically stored currency. It can be stored in your mobiles, computers, or any storage media as a virtual currency.
Bitcoin is an innovative digital payment system. It is an example of a cryptocurrency and the next big thing in finance. 

There are 3 ways you can get a bitcoin in your electronic storage:

  1. Trade Money For Bitcoin: Say that the value of a bitcoin is 1 lakh rupees, so if you want a bitcoin, you can trade a bitcoin in place of 1 lakh rupees. This Bitcoin will further be stored in your electronic storage media which you can further use.
  2. Trade Goods For Bitcoin: Say that the value of a bitcoin is 1 lakh rupees and you have a commodity that has its value as 1 lakh rupees, so you can trade that commodity in place of a bitcoin, and the bitcoin will be stored in your electronic storage media.
  3. Mine Bitcoins: Other than trading, you can also mine bitcoins. Since it is a decentralized currency, there is no authority that brings bitcoins into the market. Bitcoins only come into the market by mining them.

Brief History:

“Satoshi Nakamoto” is presumed to be the pen name for the person or people who designed the original bitcoin. Bitcoin was first introduced in the year 2009 as a medium of exchange. Bitcoin then started as a peer-to-peer network to generate a system for electronic transactions. Since then, there has been a rapid growth in the usage as well as the value of bitcoin which is a popular system of digital currency.


Value of Bitcoin

A normal piece of paper and a currency note is physically the same but the value of the note is decided by an authority or a centralized government. But Bitcoin is a currency that does not have any centralized government or authority to control and decide its value. It is a decentralized digital currency. 

How Do Bitcoin Transactions Work?

Bitcoin transactions are digitally signed for security. Everyone on the network gets to know about a transaction. Anyone can create a bitcoin wallet by downloading the bitcoin program. Each bitcoin wallet has two things:

The public key can be shared with anyone but the private key must be held by the owner. If the private key gets hacked or stolen then bitcoin gets lost.

A bitcoin transaction contains three pieces of information:

Bitcoin transactions are verified by the nodes on the network. Once the transaction is verified and executed successfully, the transaction is recorded in a distributed public ledger called a blockchain. A bitcoin can also be considered as an invisible currency with only the transaction records between different addresses. 

How Do Bitcoins Come Into Market?

Bitcoins are a decentralized currency, they aren’t printed, like rupees, they’re produced by people, and big companies, running computers all around the world, using software that solves mathematical problems. 

How Does Bitcoin Mining Work?

In the Bitcoin network, there are nodes that use the computing power of their CPU to process the transactions. The following are the steps followed while mining a bitcoin:

How Do You Buy Bitcoin?

There are three ways to get a bitcoin:

1. Buying: Many marketplaces like Bitcoin exchanges allow users to buy or sell bitcoins using different currencies. If one does not want to mine a bitcoin, it can be bought using a cryptocurrency exchange. Most people will not be able to purchase the entire BTC due to its price, so it is possible to buy portions of BTC on these exchanges in fiat currency like U.S. Dollars. The following steps can be followed to buy bitcoin outside the online exchanges:

2. Mining: People on the bitcoin network compete among themselves to mine bitcoins using computers to solve complex maths puzzles. This is how bitcoins are created.

3. Transfer: Bitcoin can be transferred from one account to another just like digital cash using mobile applications or computers.

How is Bitcoin Used?

Below are some of the ways of using bitcoin:

Benefits of Bitcoin

The following are some of the advantages of using bitcoins:

Drawbacks of Bitcoin

The following are some of the cons of using bitcoin:

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