Bitcoins !! The mostly know as Cryptocurrency or Internet currency, we all heard about this quite a long ago and recently there is a big boom among the technocrats. I have seen most of my techie friends started building enterprises apps for bitcoins. So why is there so much big fuzz on these digital currencies? Everyone is running around and investing on these bitcoins, they are claiming that it would be a big success in the near future, it's gonna change the face of currency and economy in lot many aspects.
Understanding the concept of Bitcoin is quite a tedious and ambiguous one. Trust me, I have started to read lot more articles in Quora and other social blogs about bitcoins. I happened to have a good view about the bitcoins right now.
After reading and researching about bitcoins for an hour, I understood these
- Bitcoin is open technology, where we would be able to transfer the money to peer to peer without any interference of any third party banks.
- It was started by a person named - Satoshi Nakamoto in 2008 (This comes with the reference of Wikipedia)
- Technocrats such as Microsoft are claiming Bitcoin would be the next evolution of currency.
Haaa Haaa! Trust me when I got the whole picture of bitcoins, I was in a big dilemma to use it right away and I thought it's an amazing evolution trend.
In Order to understand this, i started to unravel the path of Bitcoin as a newbie. As a newbie would do, I started with the foundations of Bitcoin ideology.
Ideology of Bitcoin
If you have a friend in the USA and you live in India, you are willing to send a small amount of money say about 10$.
Okay now! If you are planning to do online transaction via banks , there are few cons such as,
- They charge you extra amount for transnational charges
- There goes lot many compilations and checks, which delays in reaching the
We all have faced this before, we were so lazy started to live with the fact. But Satoshi_Nakamoto started to think bit different he came up with this concept,
In October 2008, Nakamoto published a paper on The Cryptography Mailing list at metzdowd.com describing the Bitcoin digital currency. It was titled Bitcoin: A Peer-to-Peer Electronic Cash System. In January 2009, Nakamoto released the first Bitcoin software that launched the network and the first units of the Bitcoin crypto currency, called bitcoins.Satoshi Nakamoto released the Version 0.1 of Bitcoin software on Sourceforge on 9 January 2009.
Reference - Wikipedia
Back to our post guys !! After a while, it became a quite big viral trend among every marketers and entrepreneur. They started to empathize over this digital currency and the trend to become more big and bigger in upcoming days.
Great now we know Bitcoin history, you still don't have an idea what is bitcoins right? Yeah, I had the same problem correlating the same.
So let's take a deep dive once again, Bitcoins are the digital currency which is used for peer transactions. Using the bitcoins you would be able to buy products from online and offline stores if they gonna support bitcoin currency.
Bitcoins works quite differently as compared with the normal currency transaction when you take the normal currency transactions.
They would go to the bank and after few checks and compilation of various other banks. As a result, they would charge you few extra bucks for every international transaction, as a result people are not willing to spend few more bucks on the international transactions and it takes a lot of time for the amount of credit to the receiver side.
Now the same case with bitcoins, this how it would work. As a sender, i would be using my bitcoin wallets to send bitcoin to the receiver using his or her bitcoin address. Within seconds they bitcoins are received to the receiver. Now he can go to the bitcoin exchange center for exchanging for real currency or use the bit coin for buying things around.
If you would observe here, they were no banks involved. It just involves the two peers to transacted money directly using the internet as the common medium.
Interesting right! You would have many different questions now, let me explain you one by one.
How do these transactions work?
Bitcoins are transferred through the internet right? so the receiver and sender would have these things
- Bitcoin wallets
- Bitcoin address
This how it's gonna work! you need a bitcoin wallet, they are plenty of service providers in appstore and playstore.
As a sender
- Register an account and verify the account
- You need to purchase a bitcoins using a bitcoin exchange providers up in your country
- You need to enter the details for whom you are willing to send
(Name, Bitcoin address and your private key to authenticate the transmission)
As a buyer
- Register an account and verify the account
- Tap on the received payment (the menu might varies depending on the various apps)
How this processing of transactions work?
They are processed by bitcoin miners, they are professionals who are helping to authenticate your transactions. While you make, let me remind you every bitcoin transactions are visible in the bitcoin miner.
As a bitcoin miner, I would be authenticating the every transaction in the bitcoin network. I would basically be authenticating your account details and transactions through strong encryption. In return, i would be getting a bitcoin in return.
So this how the bitcoin works! it's just a proof of concept helping people with the digital currency. Well, on the other hand, they have evolved into various dimensions of digital currency. Several online stores started to accept the same.