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Few Words About Bitcoin
The term Bitcoin first came into existence in the year 2009. It is a unique system of money that does not require governments and banks to control it. It is a form of deconcentrated digital money that requires a computer network on a peer-to-peer basis to authenticate purchases and transactions between its users. No central authority is present to control it and keep a tab on it.
The virtual money requires a good network of computer systems to control it, unlike the traditional money and finance system that each government controls absolutely. Last but not the least, this is one of the advantages of trading in Bitcoins. Bitcoin is run on a software system with a code to back it rather than physical items in the traditional currency system.
Another good thing about this form of money is that any information regarding its transactions and all details is strict with its sender. It is a powerful thing that is driven and powered by technology alone. A lot of secret information goes around, but imagine there is no one to get hold of this vital information for its transaction.
Why Is Bitcoin So Valuable?
Bitcoin has become a highly valued system of money because of its limited availability. Its value has risen significantly since its launch in 2009. Back then, its value stood at $150 a coin, but now its value is at $62,000. But the real catch is that it has a limited supply of only 21 million coins. This is the reason for its meteoric rise. It is only expected to go rising.
Bitcoins give the investors a certain degree of freedom because they are free of all control by any particular central agency.
How Does Bitcoin Work?
The money is symbolized as BTC or XBT. When put down simply, it’s a system of transactions stored in files in computers. More specifically, it is stored in digital wallets that are in turn in the computers or smartphones of the investors. But to gain a deeper understanding of the subject, it would be wise to first come into contact with the terms that are used while a transaction is going on.
Blockchain
A Blockchain is a public ledger shared between users and is thus public. It is driven by open-source code. This ledger is systematically grouped into blocks and is tied together to become tamper-proof. Every single transaction is recorded in this ledger permanently.
Public And Private Keys
The private and public keys are the two things that allow its owner first digitally to sign the contract and initiate its proceedings. It gives him sole authority over the transaction.
Bitcoin Miners
Interestingly, the members of this group are the bitcoin miners. Transactions can only be confirmed and initiated by the miners on high-speed computers. And this transaction takes place in only 10-20 minutes which is a very short time that would not have taken place in a traditional bank.
Mining of Bitcoins
The Bitcoin miners, variously known as nodes confirm a transaction, then make it and finally they add it to the block where everything is recorded permanently. In return for the investment, they made they are rewarded with bitcoins. But every transaction is also verified in the transaction network itself. It reduces the chances of fraud taking place. Proof of the work that has gone on is done by the miners themselves confirming the data in each block.
The Pros Of Bitcoins
The pros of the currency are:
- It is a very secure and private transaction that can take place anytime with the help of the Bitcoin Motion Software app.
- Has the potential of colossal growth
- It is decentralized
Conclusion
Although a very secure form of money exchange and transfer, many advisors would not suggest investing 1-10% of your assets because of the volatile nature of the whole system. It could be that you may stand to lose your money and ultimately you are left with nothing to survive on. So it’s best to be careful before investing in cryptocurrency.
