Bitcoin is a digital currency that can not be touched or seen like a normal currency but used to make online transactions. It works in a similar way to make online transactions like any normal euros or dollar or any other currency. This electronic currency is a decentralized, that means no government authority or any other authority has a control on it. It works on a peer-to-peer basis in real. We can say thus, a bitcoin is a cryptocurrency and worldwide available system.
Who Created Bitcoins and Prints it?
It was first invented by a software developer Satosh Nakamoto and released in the year 2009 as Open Source software to the world. The intend was to create a digital currency that was offered at lot transaction fees and be independent of any central authority.
This digital currency is not printed like any normal euro or dollar currency and anyone can join to the bitcoin community by mining in a connected
network of such users.
There are many terms associated with the use and transaction through this currency like, mining, blockchain, private keys etc. Lets know about all of them one by one.
Whenever someone applies for bitcoin account, an online wallet is created on his name. One can record his address on this like any email address. Blockchains are the ledger in bitcoin transactions that keeps all the record. It is a shared ledger and includes all the confirmed transactions that has happened in the block chain.
Since there is not government or trusted authority behind bitcoin transaction, so whatever happens is recorded in Blockchain software and the maintainence is performed by a network of communicating nodes.
It works in a perfect way and after every six hours a new group of accepted digital transactions which is called “block” is added to this blockchain ledger and is published to all the nodes. The benefit of this is that all the nodes come to know what and how much bitcoins have been spent and used to prevent double-spending and duplication.
Private Keys and Transaction Fees
Everyone who holds bitcoins get a bitcoin wallet. Every bitcoin account has a secret private key also known as seed. These seeds are important and needed to do digital signature every time any transaction happens. One must save it somewhere otherwise he cannot make transaction and the bitcoins are lost.
A transaction can have one or more inputs and outputs. To understand this we can say that when someone sends bitcoins to some other address, the user designates the amount of bitcoins he wants to send and the address of the receiver in an output. But each input must refer to the previous unspent output in the balance blockchain to avoid any double spending. This means any transaction can have multiple outputs and any unused satoshis(unit of bitcoin) become the transaction fee.
Since the bitcoins is a digital currency which is not printed physically like a normal currency but is generated by distributed network among people who has a wallet for it through mining.
Mining keeps the transactions happen in the chronological order in the blockchain.The information is saved with some strong rules that do not allow the previous blocks being modified otherwise it would invalidate all the further information int he following blocks.
Anyone who has bitcoin account in the world, can be used to send or receive the bitcoins transactions. Also, there is no restriction of opening accounts for different purposes. For example a person can open different bitcoin account to serve different purposes like, official, business, personal etc. One thing is important that once you send bitcoin currency to anyone, it cannot be refunded back unless and until the receiver wishes to do the same.
Where Can We Get Bitcoins?
This is the first question arises in anyone’s mind who is willing to get bitcoins. A physical currency can be obtained from a back but bitcoins are in bitcoin exchanges. Another way of getting bitcoins is purchasing from other users who already have bitcoin wallet.
The value of a bitcoin varies from time-to-time like a normal currency and is now it’s roughly $1,200.