Since its creation in 2009, Bitcoin has taken the world like a storm though various highs and lows. Even though Bitcoin is considered the leading cryptocurrency it is still shrouded with mystery and confusion for the most part. Most of the general masses either have no clue what it is or how it functions or they do not care. But they should because Cryptocurrency is here to stay or some might say it's the future. But how does that future work?
As of now, 1 Bitcoin equals $33,936.10 or Tk27.82 Lakh, as the digital currency extended its record smashing rally on Saturday, beginning the year with a surge over $30,000 for the first time. But what exactly is this Bitcoin?
Emergence of Bitcoin
Bitcoin is a cryptocurrency - created by an anonymous entity or group of individuals using the name Satoshi Nakamoto in 2008, who disappeared from the Internet in late 2010, and has not been heard from since then. The only contact people had with him was through emails and forums. When its implementation was released, Bitcoin began as an open source software in 2009.
How does Bitcoin work?
It operates in an autonomous program of software that is 'mined' in a lottery-based system by individuals pursuing bitcoin. A total of 21 million coins will be released over the course of the next 20 years. 17 million bitcoins are already in circulation at this time; that means almost 80 percent of the 21 million have been 'mined' already.
Every Bitcoin is essentially a data file that is stored on a smartphone or computer in a 'digital wallet' app. Consumers, users can send Bitcoins to each other's digital wallet as a part of the transaction. In a public list called the blockchain, every single transaction is registered. This allows the history of Bitcoins to be tracked to avoid individuals from investing coins that they do not own, making copies, or undoing transactions.
Blockchain and cryptocurrency
Here the term blockchain is severely important because along with Bitcoin every other cryptocurrency uses it to store data publicly and in chronological order in a list of records called blocks. Using encryption, the information is encrypted to ensure that the user's privacy is not violated and data cannot be changed.
Unlike modern financial institutions, information on a Blockchain network is not governed by a centralised authority. The network members preserve the knowledge and have the democratic authority to authorise any transaction that may occur on a Blockchain network. A traditional Blockchain network, therefore, is a public Blockchain.
Individuals can buy, sell, exchange bitcoin in various ways. Many markets called "bitcoin exchanges" allow individuals to use various currencies to purchase or sell bitcoins. Along with Bitstamp and Bitfinex, Coinbase is a leading exchange. But safety may be a concern as tens of millions of dollars' worth of Bitcoins were stolen from Bitfinex when it was hacked in 2016.
People may use mobile apps or their computers to transfer Bitcoins to each other. It is similar to digitally sending cash.
Using machines to solve complex math puzzles, individuals compete to "mine" bitcoins. This is how they make Bitcoins. A winner is currently rewarded approximately every 10 minutes with 12.5 bitcoins.
Bitcoin and its legality
Although many nations around the globe, such as Canada and America, have embraced Bitcoin wholeheartedly, others have not. Bitcoin use has been absolutely banned in countries such as Bangladesh, Bolivia, Iceland, Algeria, Egypt, Morroco, Iran, and Ecuador. There are also countries that have asked their citizens to be cautious when using cryptocurrencies, including India, Thailand but have not fully outlawed it but do not recognise it as a legal tender either.
Bitcoin and it's future
Cryptocurrencies such as Bitcoin are appealing because they offer many benefits, including flexibility and protection, as a means of payment. However, Bitcoin also has flaws. It's not a currency that one can start using right away, because first it takes some preparation and setup. Bitcoins are recognised as currency by very few organisations. And because of the frequent volatility in its value, Bitcoin is extremely volatile.