Cryptocurrencies are backed by math rather than the word of a government or financial institution.They are neither tied to the availability of physical goods, such as gold, nor can they be artificially created by governments or financial institutions like dollars can.
Cryptocurrencies operate solely peer-to-peer, meaning that they are completely global and are not controlled by any sort of government. In a sense, they are like virtual money that can be spent on items or services, or even exchanged for real cash.
Because anyone can create their own cryptocurrency, there are over 100 different cryptocurrencies currently in existence. However, there are only a few that are widely accepted.
This involves people using computers to solve complex mathematical puzzles in order for a bitcoin transaction to go through. When this problem is solved, the miner is awarded with bitcoins.
Cryptocurrencies have numerous advantages which can make them more desirable to use under certain situations.
Complete anonymity – transactions made with cryptocurrencies can be made completely anonymously also you have complete control over the transactions you make. This means that no company can sneak additional fees on you, there is no way to automatically withdraw from your cryptocurrency wallet.
Boast to a fast world – You can quickly and easily send cryptocurrencies around the world – no waiting for deliveries or holidays.
Security assurance – Transactions made through cryptocurrencies are secure and irreversible. This prevents chargeback scams that sites such as Paypal are notorious for. Transactions also do not contain the customers’ personal information, making identity fraud a non-issue.
When did these currencies appear?
The first Cryptocurrency was Bitcoin, which was created in 2009 and is still the best known. Bitcoin is a consensus network that enables a new payment system and completely digital money.
It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet.
Bitcoin is the first implementation of a concept called “cryptocurrency”, which was first described in 1998 by Wei Dai.
The first Bitcoin specification and proof of concept was published in 2009 by Satoshi Nakamoto , which is a pseudo -name used by the person or people who designed Bitcoin and created its original reference implementation, Bitcoin Core (formerly known as Bitcoin-Qt). The public bitcoin transaction log shows that Nakamoto’s known addresses contain roughly one million bitcoins.
Denomination of a Bitcoin –
Satoshi (unit) The satoshi is currently the smallest unit of the bitcoincurrency recorded on the block chain. It is a one hundred millionth of a single bitcoin (0.00000001 BTC).
Working of a Bitcoin –
Bitcoin is a cryptocurrency that is conducted on a public ledger, the “blockchain.” Digitally transferred, it exists only online. Much like gold, it can have monetary value while also being a commodity, but it’s still its own currency. It is also decentralized and not managed by a single entity, but rather a group of people who process transactions, called miners. This means it is not subject to government regulations when traded or spent, and you don’t need a bank to use it.
BITCOINS are mined –
Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the block chain, and also the means through which new bitcoin are released. Anyone with access to the internet and suitable hardware can participate in mining. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The participant who first solves the puzzle gets to place the next block on the block chain and claim the rewards. The rewards, which incentivize mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released bitcoin.
Is BITCOIN Infinite ?
No, at the maximum, the system is designed to top out at 21 million bitcoin. At that point, bitcoin will stop being released. Most people think that will be around the year 2140.
Who control Bitcoin?
Creator Satoshi Nakamoto designed bitcoin such that a central authority would not be needed.
The Bitcoin.org website says, “Nobody owns the Bitcoin network much like no one owns the technology behind email. Bitcoin is controlled by all Bitcoin users around the world.”
Who are the users of Bitcoin?
There are many assumptions about Bitcoin users – that they are weirdo, fantasists, nerds, criminals, idealists and so on.
However ,we can identify four types of broad Bitcoin users and the major reasons for Bitcoin’s appeal are : for computer programmers: the rewards for mining, for speculators: the volatility, for the libertarians: the perceived lack of regulation, and for criminals: the perceived anonymity.
Criminals came to be associated with Bitcoin via the story of the Silk Road marketplace.Silk Road was an online marketplace for drugs operating on what is known variously as the Dark Web, the Dark Net which covers all the parts of the web that search engines do not index, but the “dark” aspect refers to sites that feature user anonymity and are, by default, difficult to access.
The profit part of Bitcoin –
It was nine years ago when Bitcoin first came on the scene. In July 2010, one bitcoin cost a mere $0.08. Today, the digital currency is trading at over $6,600 with a market cap worth over $110 billion. If you had invested $1000 in bitcoin when it launched, you would be sitting on $82.5 million now. We have a lot of pity for that person who exchanged a pizza for 400 Bitcoins.The status of bitcoin as a legitimate financial asset may be rising even faster than its price.It had a market capitalization of around $45 billion as of July 2017.
Bitcoin and India –
In India, it is still not legal to trade in Bitcoin or any other cryptocurrency directly, although you can have a digital cryptocurrency wallet and buy or mine these cryptocurrencies. You could even possibly sell them in the digital world, but for exchange with other cryptocurrencies only.You cannot take physical delivery of money.
There are already 3 major bitcoin exchanges: Zebpay, Coinsecure and Unocoin. The growth of cryptocurrency in India had been growingsteadily, just like in most parts of the world, up until the end of last year. India is estimated to account for nearly 11% of global Bitcoin trade. During demonitisation period , many people turned to Bitcoin due to panic , ignoring its legal impacts.
Other cryptocurrency –
Cryptocurrencies other than Bitcoin are often referred to as “altcoins ” such as Ripple , Ethereum , Zcash , Monero , Dash and Litecoin. Each altcoin comes with its own strengths and weakness.
Who may become the biggest fish in the crypto pond ?
Ecommerce giant Amazon
has secured three new domain names related to cryptocurrency, sparking speculation that the e-commerce giant could be preparing a move into the cryptocurrency space. The domains: amazonethereum.com
.There have been some rumors
of Amazon eventually accepting cryptocurrenciesIf and when it happens
Amazon accepting payments in cryptocurrencies would be one giant step closer to major acceptance for the leading cryptocurrency. You can indirectly pay with Bitcoin at Amazon
CNBC analyst and founder of cryptocurrency-focused, emphasized that the vast majority of analysts, researchers, investors, and businesses in both the technology and financial sectors strongly believe that bitcoin will “Amazon” the banks in the upcoming years. Essentially, Kelly explained that as Amazon rendered the existence of traditional retailers useless, the adoption of bitcoin will lead to the decline of banks and the entire financial industry.
Where will Bitcoin be 10 years from now?
What will happen to your $1000 in ten years’ time if you were to invest today in Bitcoin ? The truth is: nobody really knows. However , according to Kay van Petersen, a Saxo Bank analyst, in the next decade, each unit of bitcoin will be worth $100,000.
In the end, if the risk is high, the reward is high too. Why not roll the dice ?
About the Author:
Muskan Itten (MCM 36)