Bitcoin is a virtual currency and also the first cryptocoin to ever gain immense popularity. It rose into prominence when the value of this digital currency rose above $13,000 towards the end of 2017. This currency has been designed to maintain anonymity during transactions. The developer of this digital currency is believed to be Satoshi Nakamoto. All the digital currencies developed after bitcoin are referred to as alternative coins or altcoins. One of the major advantages of using bitcoins is that it can be stored on a local hardware which is referred to as cold storage. If the person loses access to this hardware, their currency is just gone forever. Hence, it is advised to be careful while managing digital currencies.
How does Bitcoin work?
You must have wondered how does bitcoin work as it is always in the news for some or the other reasons. Bitcoins are virtual coins which do not require any kind of bank for storing or circulating the currency. Once you are owner of bitcoins, you can consider them to be equivalent of physical gold coins. Bitcoins possess a value. All crypto currencies possess a value. You can use bitcoins for purchasing goods and services online. You can also store them in the hope that their worth would increase over the years to come.
Bitcoins get traded from one wallet to another. You can consider a wallet to be a personal database that you can store on your computer or your smartphone. These are forgery resistant which implies that it is impossible to create a bitcoin computationally.
Bitcoins hold a simple data ledger file which is referred to as a blockchain. What is cryptocurrency each is unique to each user and their wallet. All the transactions made using bitcoins are available in a public ledger. This helps in preventing fraud and in ensuring their authenticity. This enables in preventing transactions from being duplicated in any form. Although bitcoin records the digital address, it does not record the names of people owning the wallet. This implies that digital transactions using bitcoins are digitally confirmed and anonymous at the same time. People can never make out your personal identity if you make financial transactions using bitcoins. However, they can check the history of your wallet transactions. This is a great thing as it increases the security as well as imparts transparency to the system.