India has reached 2nd in the list of countries with the highest cryptocurrency adoption rate as mentioned in the report of chain analysis.
The worth of Bitcoin boomed from £ 3,600 in the match to £27000 now when one of the most influential people, Elon Musk endorsed bitcoin as “a good thing” in his tweet.
Despite by condemned by lots of country’s risks of consumers, El Salvador has become the first country in the world to accept bitcoin in legal tender.
Due to such acceptance from the world, it has become necessary to understand Bitcoin and its functioning.
What is Bitcoin?
It is a digital currency that is not backed by government authority and works on the principle of blockchain technology. When it was launched in 2009 by Satoshi, he stated that it is an electronic payment system based on cryptographic proof instead of trust. But today people look at bitcoin as an instrument for investment and not for buying and selling due to its volatility and also due to lack of legal clearance in various countries.
What is so unique about Bitcoin and why people are going crazy about them?
● It is an intangible asset stored as a digital file in virtual wallets.
● People can sell and buy bitcoins for real money.
● Each transaction is recorded in a public ledger.
● This became popular only because people are willing to exchange them for real goods and services.
● Transactions are fully autonomous as not controlled by financial institutes.
● The world’s most influential people like Elon Musk, Jack Dorsey, Mike Tyson, etc, and trusted organizations like Paypal, Amazon are showing faith in Bitcoin which is one of the biggest reasons for its tremendous growth.
How does it work?
Bitcoin is a decentralized platform of exchange as it uses blockchain technology. As the name suggests it is a chain of blocks joined in systematic order. These blocks contain all the information necessary for transactions like details of the sender, recipient, value, a unique identification code for each transaction, hash (unique code) of the previous block.
Every time a new transaction block needs to be added to the Bitcoin blockchain and then it is first verified by most Bitcoin holders and finally, it can be added”. Each Bitcoin wallet has a secret piece of data known as a private key or seed, which is used to sign transactions and provides a mathematical proof that they have arrived” from the owner of the wallet. All transactions are visible in the network and are confirmed within 10-20 minutes.
How can you get Bitcoin?
There are 3 methods to get Bitcoin:
1) To buy it with real assets from various applications or websites.
2) To sell goods and services in return for bitcoin.
3) To create bitcoin using computers.
This method is that easy as it sounds, let’s discuss it in detail.
For getting bitcoin, you require a sophisticated computer as you need to solve a complicated mathematical equation and in return, you are rewarded with a Bitcoin. This process is known as mining and professionals who solve this is known as miners. Due to this process, no group or individuals can control what is included in the blockchain or replace parts of the blockchain making it a secure network without regulation from any central authority.
Prospects
Despite fallen by 24% to nearly $48,000 in August from $63,000 in April 2021, investors have shown faith in Bitcoin.
The supply of bitcoins is limited to only 21 million coins, so with time, its prices are expected to rise, as it is believed to bring financial revolution across the globe.
But only one point can limit its popularity and demand that is a clear chit from the government of various countries as JP Morgan Chase CEO Jamie Dimon calls it little more than a “fraud”. Also, Sudarshan Sen, an RBI official on said that the central bank was uncomfortable with “non-fiat” cryptocurrencies like Bitcoin.
Response from people is skeptical hence next 10-20 years will decide the future of Bitcoin, as they are on the verge of acceptance by the world.
