Money! One of the pleasant sound we have ever heard in our entire life. It hasn’t been long when people used to exchange things like grains, golds, silvers etc. as a method of transaction to buy as well as sell things. Well things have changed right now. We don’t want to give our stuffs such as rice or any gold (not compulsory) if we want to get something from any resources (it might be food from grocery, clothes from tailor etc.).Now the excellent system of currency that is printed on a paper or hammered on a coin is enough for our day to day transactions. The traditions of exchanging gold and silvers have come to an end. Even we have special places for these moneys to be stored at ‘that is, Banks.Till then the things were running as usual until an unexpected cryptocurrency begun to rise in the world of internet called as, BITCOIN.
WHAT IS CRYPTOCURRENCY or (the first ever BITCOIN)?
Cryptocurrency is a digital system of transactions in the context to exchange money which don’t has any of the link with physical asset and is totally secured by cryptography. It is a digital code which is not possible to crack easily and used for tracking purchase or simply (transactions). Bitcoinwas the first decentralized cryptocurrency ever known.
STARTING OF BITCOINS!!!
Then the world started knowing about bitcoins where it begun to rise in the world of internet resulting in its value to be up to 11,301.17 USD dollars up to this position and indeed it’s a revolution in the world of cryptocurrency.
THE FOUNDER OF BITCOIN (MYSTERY!!!)
The true founder of bitcoin is still a mystery. The information we know till now is satoshi nakomoto, the real founder of bitcoin but it’s still not sure that it’s he, she or even it might be they. Let’s name him “he” right now. According to Gavin Anderson, the lead developer of bitcoin,Gavin was in contact with Satoshi Nakomoto where he figured out that Satoshi had already developed the idea to form bitcoins in early 2007 but it took him couple of years to be convinced that it’s right to be implemented. Indeed,Satoshi was a genius person who not only visualized the concept of cryptocurrency (bitcoins) but also, he was able to implement it. And obviously the world is captured in it now.
Prospects of bitcoin (general introduction)???
Bitcoins are the cryptocurrency as mentioned above but how long are they continuing in this way. Like the currency we use today bitcoins can’t be made up to infinite terms. Bitcoins are limited. Till this date bitcoins are almost ranging from 14 to 15 million and is agreed to reached at the point of 21 million. Then the productions of bitcoins will stop by 2140 where it is estimated to reach at the point of 21 million.
Source::: https://bitsonblocks.files.wordpress.com/2015/09/11.jpg
INVOLVEMENT IF PEOPLE IN BITCOINS!!!
(first phase a great challenge)
BITCOINS are taken illegally in some countries but probably Germany is the one who has officially accepted bitcoin as a currency to be used in their country. People use bitcoins simply as a digital asset. They use a simple wallet application to handle bitcoins transactions, key, passwords etc.
First it was a great challenge to bitcoins because of the illegally trading websites such as silk roads (which was used for trading guns, drugs, cocaine etc.) and a special black market (in deep web) used main bitcoins for trading because it was the most decentralized peer-to-peer technology which was very safe. Obviously, it was a great challenge to bitcoins because it might have been banned due to its flexibility, but it is obvious that bad people have the way to do it at any case where bitcoins has just made it easier. Even if bitcoins had been banned the black marketing of drugs or cocaine wouldn’t have been dismissed.
WHY USE BITCOIN???
There are a lot of reasons why people use bitcoins as their transactions. It is much satisfying too, then the facility that banks provides us. As it is a peer-to-peer network, involvement of only two parties are required to perform the given transaction.
CAN YOU CONVERT IT:
yes, the most important thing about bitcoin and a special query is “Can you convert it?” And there’s a simple answer to that. Yes, it can be converted but we need a two party who are ready to give one and the other is ready to accept one. It seems to be a little bit of confusing but along with the time bitcoins are increasing in every country which has made its conversion easier.
PAY ANYWHERE AND ANYTIME:
BITCOINS, payments are easier and faster. We can perform transactions irrespective of geographical locations and use of any centralized system. Bitcoins are very easy to transfer and even it doesn’t take a long time to do so. It settles down within an hour. If anyone has an excellent connection to the internet than that’s a brilliant way for performing transactions on bitcoins.
EASY AND EFFORTLESS TRANSACTIONS:
we all know about the long processes we must go through banks in order to keep and withdraw our money. Even in some of the contexts people are undeserved by banks due to their regulatory cost and unnecessary payments. Even we know that we must pay some money from our pocket to transfer money from one place to another while the bitcoin provides us with the easy access to the trading without any long processes.
PRICELESS AND TIME SAVING TRANSFERS:
our current currency needs to be transferred to some other locations in need because of working abroad or any difficult geographical location. Even some transaction need days to occur while bitcoin in just few days provides us the place to it. Also walking with credit cards and giving fees for each transaction is not very good and also uncomfortable in the view of bitcoins.So, everyone now is motivated in saving time and money through bitcoins.
GOOD PRICE:
Bitcoins are much trending now because of their increasing prospect. In todays date the value of one bitcoin in $11,301.17 which is very helpful. Not only that but the people who had believed in bitcoins and traded with it in the past are millionaires now. So, bitcoin has created a large department enough to have developed much more millionaires in this world.
Source::: https://d.ibtimes.co.uk/en/full/1580562/bitcoin-market-cap.jpg
HIGH LEVEL OF SECURITY:
Though bitcoins have carved a path for many of the other cryptocurrencies such as Lite coin, doge coin, etc. but bitcoin is widely in use due to it’s effective security and good payment systems. Bitcoins are not only the good ones but are very secured and easy to use.
Bitcoins have the potential to rule the world azzfter some decades due to the flexibility, time saving and understanding it gives to the people.
HOW DO BITCOINS WORK???
bitcoins are totally carried by a network of computers which validates and keeps track of bitcoin payment over the bitcoin network. The transaction applied on any of the networks travels through a special nodes(computers) so called miners. They provide with the ability to record the bitcoins payment on a computer.
PAYMENT RECORD: THE BITCOIN BLOCK CHAIN:
many individual nodes around the world work on the process and payment system of bitcoin. Every node computer working on it has a specific file (splitted into several files) known as block chain. A block chain is like a list or a database similar to a bank ledger which contains transactions imbedded into it. It keeps the track of each and every transaction that happens in the bitcoin network.
Before any of the transactions to be added on the block chain there needs to follow a series of steps termed mainly as mining, which will be discussed further in topic how is transaction entered over the internet.
TRANSACTIONS INTO EACH AND EVERYONE BLOCK CHAIN: THE BITCOIN NETWORK:
As discussed earlier, all the computers which work together and connected to the bitcoin network have a specially designed same software in them which allows them to pass information to each other.
When anyone makes a bitcoin payment, every payment done in the specific bitcoin network is added to the block chain in every individual computer which mina tries it (so called as mining). Then, roughly in every 10 minutes a new block (a verified transaction carried on a bitcoin network) is added to the bitcoin block chain and is updated in each and every node computer connected to the bitcoin network in the same 10 min. this allows each and every transaction to be completed successfully.
PEER-TO-PEER:
it might be noticed in many places earlier that it is a completely decentralized peer-to-peer basis working connection. It means I doesn’t go directly to centralized host computer but there’s a role of every computer on a bitcoin network to make it happen. It travels from nodes to nodes where it gets added to the block chain by one of the potential miners.
HOW ARE BITCOINS STORED?
Unlike banks which stores money in lockers and gets them out in need, bitcoins are the digital asset which are too stored, but it has a complete different mechanism than that used by banks or any other systems. Bitcoins being digital assets are stored by the help of address like account numbers in banks. Bitcoins are associated with bitcoins addresses which is then stored in a bitcoin app called as bitcoin wallet which stores bitcoin addresses, signatures, keys, payments and so on.
BITCOIN ADDRESS:(ACCOUNTS):
A bitcoin address is a specific address like an account number we have in our banks which allows us to perform transactions over the bitcoin network. If we want to receive a bitcoin payment from a specific account, then we can tell him/her our special bitcoin address in order to be able to perform transactions.
BITCOIN WALLET (THE MONEY STORING BANK IN POCKET):
As we carry our money in wallet where we can fill it up with many paper notes for e.g. As 5, 10, 20, 50 rupee notes. Similarly, we can store bitcoins addresses which can be stored in the bitcoin’s wallet for our bitcoin transactions. For the bitcoin wallet application to display all our transaction we must be connected to the bitcoin’s block chain network where it finds out the information about the balance in our account. Since bitcoin payment system has an individual address for each transactions bitcoin wallet helps us to create a new address for incoming request and provide us with more new features to make us user friendly.
Source::: https://bitsonblocks.files.wordpress.com/2015/09/3.jpg
APPLYING BITCOINS TRANSACTIONS (PAYMENT SYSTEM IN BITCOIN)
As discussed in bitcoin address, bitcoin transaction is applied by using the specific bitcoin address only having address for transaction is not enough. If anyone comes to know about our address, then they can just take all our money and its indeed very much senseless to imagine so. The main thing about bitcoin transaction is more than its address that is its private key. It’s done by applying simple math’s in the address for e.g.
If 437hgdois74783klwei7378jkejwkus is our bitcoin address, then by applying some math’s to it such as f(x)=902hjksahd9022189hw732bdsjk832jdsi where “x” is the bitcoin address and f(x) is the private key.
PRIVATE KEY:
Private key is something we never want to lose up as it is used for sending and applying bitcoin transaction. In bitcoin transaction, private key is previously encrypted by a wallet application of our mobile phones or computers so that’s its easy for a user to input it just by using password. Private keys are like the keys to your home. And on a special note copying our wallet information and address doesn’t doubles our money. It’s because the private keys are like our home keys. It means how many duplicate keys we have but we must live in the same home. Our house is not going to be doubled.
PROCESS DURING THE BITCOIN TRANSACTION IS BEING MADE!!!
Making a payment in our daily life just means to lose from our wallet and gain in others wallet. The same process is all over the universe but it enterprises of three things and they are the money amount, from whom and to whom. Same process is involved in bitcoin where it says about which coin, from which address and to which address. It comprises of these three things to just make a payment system. Additional things to be utilized are very necessary as shown below.
USE OF PRIVATE KEY(DIGITAL CRYPTOGRAPHY SIGNATURE):
After we make process for bitcoin transaction then the instruction is digitally signed with the private key of the address which is the owner of the bitcoins to be transferred. Then the private key is the proof that we are the real owners of the transferring bitcoin.
Then the process is completed with the help of any other computer nodes on the way. The work of providing the information about the transaction id done by the specific wallet software in a specific manner.
COMPUTER NODES(SECURITY):
These computer nodes are the specific places which validates the instruction for transactions properly. It checks the things such as (the message formats, the version number and the receiving address etc.). this computer is just an example for it. The instruction passes through several computers and be followed up and the verification continues as it is just coming from an unknown source and in this case, nobody is trustworthy due to wide bitcoin range.
After this test is performed then the unverified instruction is ready to be verified by the block of miners by publishing them to the block chain list or simply ledger of bitcoins. The information is unverified until it is posted in the ledger of bitcoin.
WHAT HAPPENS TO THE UNVERIFIED INSTRUCTION???
(HOW TO ADD IT ON UNIVERSAL BLOCK CHAIN)
As the computer nodes validate the instructions then the miners attempt to add the instruction to the block chain which then completes the transaction. The process is known as mining bitcoin. It consists of the process that uses a special mathematical problem and the miner to solve it first by creating blocks can gain reward. That is the main purpose that a miner mines bitcoin for his/her profit.
MINING:
mining is a special facility provided by the bitcoin to have a confirmative test for a bitcoin transaction to be applied properly. Mining has provided additional security to the transactions specially making the whole system decentralized as it is practiced by variety of users and thus is not so easy to prevent double spending problem. Till now for one mining the reward is 25 bitcoin which is very great to miners. Miners are the special security providers to the network. More the miners more there is security being provided to the transactions. With a special software miner apply some mathematical solutions to a specific mathematical problem in order to confirm any of the transaction. Since bitcoins don’t have any of the specialized software and is decentralized all over the network miners are the one who produce bitcoins as our central government tends to produce money in in need.
HISTORY OF MINING!!!
Previously bitcoins were just made by the simple programming in the computer. Lead developer of bitcoin Davin Anderson says that, he used to make bitcoins out of programming by his ordinary laptop himself, but he stopped it because he found that he was paying more in electricity than the bitcoins he made worth’s. Indeed, it was also a small process which could be termed as mining.
Then people eventually found out that it was easy to mine with the help of C.P.U in the early days. Indeed, they used their ordinary C.P.U to mine. But eventually they found out that graphics card used in gamed were more effective in solving it. But it used more electricity and would heat very fast. Not only that, human is never satisfied. Then they developed a special chip reprogrammed with mining capability which used to mine bitcoins better than any other mining software did. Then comes the legend of all, ASIC or (Application-Specific Integrated Circuit Chips). ASIC technology has made bitcoin even faster with less electricity consumption.
As the popularity of bitcoin went on increasing miners mining in the bitcoin network also increased. Now the bitcoins begun to develop a greater solving skill needed problems which is like very hard to do. It has become like the man with a greater gun wins. So, people now developed an idea of pool mining where they eventually made groups and mined together. Each individual reward from the mining was shared with in the group with each other.
CONTRIBUTION OF MINING:
Mining has given a great aspect of security. Miscreants are prevented from creating copy of transactions to have profit termed as double spending problem. Miners are the special people who ensure that the bitcoin network is going stable, secure and safe. They not only prevent miscreants from preventing to double spend but also has prevented miscreants from writhing abnormal transactions to the block chain as they have to buy a very high processing machine to do so and also miners check each transaction where they deny the transaction going beyond the business rule to be published on block chain.
PROBLEMS WITH BITCOINS: TROUBLE OCCURRING IN BITCOINS
Bitcoins are covering the whole world with a great care. But not everything goes right in such case. Bitcoins still had to go with many problems and indeed with a special solution to them. So, some of the problems that bitcoins have faced can be given by:
DOUBLE SPENDING PROBLEM:
SATOSHI NAKOMOTO, was probably most genius that he came up with an idea to prevent this problem. But what is double spending problem????
As we know before any completion of transaction in bitcoin it needs to be first passed through many of the confirmative test. It’s not like in a real world that we go and buy something giving a money which doesn’t takes a long process to be confirmed. It takes some time in bitcoin society to confirm the transaction within which a miscreant can send the same money to another address too. So there comes double spending problem.
But SATOSHI NAKOMOTO was a real genius. In this case if a miner grabs the first transaction before the second one then its easy for another to be deleted. But the main factor creating problem here is “what if two transactions become loaded simultaneously at the same time?”. Both might be copied. Then in such case the race begins. It again goes to another miner who again confirms them and the one among the two which goes first is accepted. But what if both again appear simultaneously? In such case the process is repeated 6 times where there is no chance to be a DOUBLE SPENDING PROBLEM. In such case if a non-receiver address is accepted then the receiver’s address will be deleted. In this case the party which should receive money might be in problem if he pays out the sender in just one confirmative test. Therefore, it is suggested to the receiving party that he/she should wait for 6 confirmative tests to be completed before delivering any product or converting money and so on.
BLACK MARKETING:
Most of the sites such as silk roads and deep web’s (special black-marketing place) accept only bitcoins due to it’s peer to peer decentralized network. So, it might create a problem to bitcoin manufacturers but its mentioned above that bad person never lets good to happen and there is no any offence for bitcoin to do so.
Source::: https://i.pinimg.com/736x/d8/f7/b0/d8f7b055c89fe0c69836b7cbed542513--silk-road-cloud-computing.jpg
!!!CONCLUSION!!!
From above article, its clear that it is totally irrelevant to take bitcoin as a kid’s job. We should always keep in mind that the money we spend on bitcoin might be lost at any time because it’s just a cryptocurrency and its value might drop down at any extent. But no one can predict the future. It might result in the birth of some extraordinary bitcoin millionaires and be very useful in the upcoming decades. There’s a specific reason to say that the bitcoin might run the world in coming decades but there’s also a reason for bitcoin to drop down directly at a constant rate resulting in those millionaires to be beggar. Bitcoins if utilized properly seems to have many possibilities due to its low operating cost, easiness, efficient transfer and many other amazing features. Its possible that bitcoins have a greater prospect for our next generation to provide an efficient transaction without any centralized system of banks to create our money to ourselves.
