Bitcoin – What is Bitcoin | Why we use it | How it works

What is Bitcoin?

Bitcoin also known as Digital currency or Cryptocurrency  was created in January 2009 by the person or persons whose identity is still a mystery. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and, unlike government-issued currencies, it is operated by a decentralized authority.

Bitcoin, often described as a cryptocurrency, a virtual currency or a digital currency – is a type of money that is completely virtual.

Is Bitcoin useful?

It’s like an online version of cash. You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether.

However, some companies are beginning to buy into its growing influence.

In October last year, for example, the online payment service, PayPal, announced that it would be allowing its customers to buy and sell Bitcoin.

Is Bitcoin physical, Can we touch it?

The physical Bitcoins you see in photos are a novelty. They would be worthless without the private codes printed inside them. As, Bitcoin is a type of cryptocurrency. There is no physical Bitcoin, only balances kept on a public ledger that everyone has transparent access to.

Are Bitcoin transaction safe?

All bitcoin transactions are verified by a massive amount of computing power. Every ten minutes or so these transactions are collected together by miners into a group called a block and added permanently to the Blockchain. This is the definitive account book of bitcoin.

Bitcoin is not issued or backed by any banks or governments, nor is an individual Bitcoin valuable as a commodity. Despite it not being legal tender in most parts of the world, bitcoin is very popular and has triggered the launch of hundreds of other cryptocurrencies, collectively referred to as altcoins. Bitcoin is commonly abbreviated as “BTC.”

Why we use Bitcoin?

Bitcoin was created to allow people to send money over the internet. The digital currency has been intended to provide an alternative payment system that would operate free of central control but otherwise be used just like traditional currencies.

How Bitcoin Works?

Bitcoin is built on a distributed digital record called a blockchain. As the name implies, blockchain is a linked body of data, made up of units called blocks that contain information about each and every transaction, including date and time, total value, buyer and seller, and a unique identifying code for each exchange. Entries are strung together in chronological order, creating a digital chain of blocks.

Can we convert Bitcoin to Cash?

Because Bitcoin is also a currency, it can be exchanged for cash just like any asset. There are numerous cryptocurrency exchanges online where people can do this but transactions can also be carried out in person or over any communications platform, allowing even small businesses to accept bitcoin. There is no official mechanism built into bitcoin to convert to another currency.

Nothing inherently valuable underpins the bitcoin network. But this is true for many of the world’s most stable national currencies since leaving the gold standard, such as the US dollar and UK pound.

What are the problems with Bitcoin?

Along with the profits, There have been some criticisms of bitcoin, including that the mining system is enormously energy hungry. According to The University of Cambridge’s online calculator, the energy consumption and at the beginning of 2021 was estimated to use over 100 terawatt hours annually. For perspective, in 2016 the United Kingdom used 304 terawatt hours in total.

Because of it’s misuse by some people, The cryptocurrency has also been linked criminality, with critics pointing out to it being a perfect way to make black market transactions. In reality, cash has provided this function for centuries, and the public ledger of bitcoin may actually be a tool for law enforcement.

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