In the present day, digital currencies have received a massive boost, both from society and governments around the world. Just a few years back, most people didn’t have the slightest clue as to what cryptocurrencies or digital currencies were. And the way it has been coming up, it becomes important that people should understand what it is and how it works.
How Does Bitcoin Work?
Bitcoin is used for transactions between two parties. This is done online and involves only the two parties and a private server for every transaction. For example, Person A wants to buy a mobile from Person B but stays very far from Person B and doesn’t even have a bank account. So he will use the Bitcoin in his wallet and safely complete the transaction without any hassle and without anyone else even knowing that he has done the trade.
Now wouldn’t it be so very nice if anyone who needed money just did some tampering with a computer and obtained money? But unfortunately, this is not free of cost. Otherwise, you can imagine a world with an unlimited supply of money. For Bitcoin Mining you need to purchase a Custom Bitcoin Mining Hardware which can cost from a few thousand rupees to a little over twenty lakh rupees. It mainly depends on how much Bitcoin you want to extract in a short span of time. Secondly, you will need an online wallet. This online wallet can be accessed by anyone, you know because it’s online. So in order to keep unwanted visitors off your lawn, you can encrypt it with a two-step verification process of which only you are aware. While mining for Bitcoin you have two options: You can join an already existing pool, start the mining by yourself or create a pool of people who are willing to mutually cooperate with you. Working in a pool brings quicker results but the rewards are divided between everyone. Working by yourself can take some time as people would not know about you in the beginning. Next, you need to download a Mining file. Most Mining files on the internet are open source ones that can be downloaded without any hassle. The two most popular mining programs are CGminer and BFGminer. Remember to connect the program to your wallet. Now, you have worked enough to start the miner. All you need to do is run the miner. Once your program has been successfully configured, the mining will begin. The other programs on your device will slow down to a crawl when the operation is taking place. You need to be very careful while this occurs. Bitcoin Mining can push both hardware and software to their limits. You MUST use applications that lower the temperature of your device. Graphics cards should never exceed over 80*C. Finally, you have to check your profitability. That is, you see whether you have made a profit of this all within the last few days or has it just been a waste of time. This can be done by calculating the amount of electricity your computer took during this process.
Advantages of Bitcoin
Bitcoin has many advantages. Some of them are as follows:
- The Bitcoin network is next to impossible to tamper with.
- Currently, there are either no fees or very low fees within Bitcoin payments.
- All transactions are transparent.
- You are the only one who knows about your money, no one else does.
- There is no need to add extra charges since it’s P2P.
- No need to add personal details to anything.
- There’s no need to consider bank holidays, etc.
- Thefts can be prevented.
- It can be backed up easily.
- One can trade anywhere and anytime with Bitcoin.
- Anyone can verify transactions at the Bitcoin BlockChain.
- In Bitcoin, the more fees you pay the more you are prioritized. This will be bad for those people who don’t have much money and have entered Bitcoin for profit.
- As more people are accepting Bitcoin, the price will eventually dropdown.
- There is a limited number of Bitcoin sites but the demand is increasing every day.
- In case of some fraudulent activity, it becomes hard to get the details.
- Ignorance towards cryptocurrency.
History of Bitcoin
The domain name bitcoin.org was registered on 18 August 2008. In the same year, in November, a person with the alias Satoshi Nakamoto authored a paper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System” and posted it to a cryptography mailing list. Bitcoin was then posted as an open-source code and implemented for the first time in January 2009. Nakamoto’s identity still remains unknown, though many claims to know it.
Even though Bitcoin might not be the most efficient mode of transacting at the moment, it definitely has the capacity to be one in the future. With online currencies on the rise, and people moving away from liquid money by the day, a future can be seen in which it is accepted in mainstream society by everyone.