Bitcoin is a digital currency created in 2009. It follows the ideas set out in a white paper by the mysterious Satoshi Nakamoto, whose true identity has yet to be verified. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralised authority, unlike government-issued currencies.
It is a digital and global money system currency. It allows people to send or receive money across the internet; even to someone they don’t know or don’t trust. Payment can be exchanged without being linked to a real identity. The scientific field of cryptography is the basis for Bitcoin’s security.
Bitcoins can be used to make all types of payment, and since they are not tied to any particular country, they can be used just about anywhere that accepts them. In addition to being easy to use for payments once a person has them, they are also anonymous. Bitcoin transfers are also similar to online money transfers and can be done using computers or smartphones.
The anonymous nature of Bitcoin has led it to be used for illegal activities both online and offline, including for buying drugs and other unlawful merchandise and services.
Bitcoin marketplaces are referred to as ‘exchanges’ and are places where Bitcoin are being bought and sold using the traditional currency. There are risks involved in this too as exchanges are known to be susceptible to hacking. Recently a crypto exchange in South Korea was hacked and eventually had to file for bankruptcy.
Blockchain is the technology behind Bitcoin, which means that all transactions are recorded and the names of users remain private. This makes it easy to buy or sell anything without anyone ever tracing it back to the people involved.
Bitcoin mining refers to the process of creating Bitcoins. In the early days, it was not very difficult to generate Bitcoin, but now it is a lot more complicated, energy and labour intensive. Complex math problems are solved, and bitcoins are created as a result of that. Nowadays, supercomputers are used to carry out calculations to mine bitcoins. However, Bitcoin mining is not for everyone; the infrastructure and energy expenses related to it make it difficult for an average person to get involved in mining it themselves.
Bitcoins can be stored in a digital wallet; people can use a third party wallet service to deal with their Bitcoins. However, Bitcoins are volatile, and their price has gone from very to very low within a short duration. This makes it difficult to predict the future of bitcoins, thus making them extremely volatile.
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