Bitcoin is a cryptocurrency or a virtual digital currency that works independently. It is the digital currency that operates independently of any central government or financial institution. Instead of relying on any central authority, bitcoin relies on cryptography and its peer-to-peer network software. The distributed public ledger store the record of transactions of bitcoin, and all transactional copies are stored on a server located across the world. Any individual with software and hardware can set up the servers, commonly referred to as a node. Bitcoin depends on the proof of work consensus method, and the record of the individual who owns the coins reaches the nodes cryptographically instead of relying on banks.
Every bitcoin transaction gets publicly broadcasted on the bitcoin network, and each node has a record of transactions. Only 10 minutes gets provided to miners, and they can choose to either mine bitcoins individually or mine in groups by joining the mining pools. Once the transactions get grouped in blocks, these get assigned permanently to the blockchain. Blockchain is the digital ledger of bitcoin. Like users keep their traditional coins in natural or physical wallets, they cannot store digital coins in physical wallets. These are the digital coins that can only get stored in digital wallets. These wallets can only get accessed from hardware or online tools or through client software. You must read about updated news bitcoin trading on the latest news website to stay updated.
A unique thing about bitcoin is that it can get subdivided, so investors don’t need to invest in a whole bitcoin. Instead, investors can invest in fractions of bitcoin as a bitcoin can be divided into thousand fractions, and the tiniest fraction is referred to as a Satoshi. In reality, there is no real thing about bitcoin wallets or even bitcoins. Instead, it is the agreement amongst the vast network regarding coin’s ownership. A user can prove the ownership of a coin with a private key.
What is the motive of creating bitcoin?
Satoshi Nakamoto created bitcoin to provide people with a new method to transfer money electronically over the internet. Bitcoin is the digital currency that acts as an alternative method of transferring money or a payment system that works without control of any central authority but can get used like conventional currencies.
Is it possible to convert bitcoin into cash?
Yes, anyone can easily exchange bitcoin for cash like all other assets. There are online marketplaces referred to as crypto exchanges that mediate and make the buyers and sellers meet and complete the transactions. Users who want to invest in bitcoin can easily carry out the transactions through the crypto exchange and pay in fiat currencies. Unfortunately, there isn’t any particular or official mechanism created to convert bitcoin to fiat currencies.
Is it safe to buy and store bitcoins?
Bitcoin uses cryptography to secure its network, and the cryptography of bitcoin got designed by the National Security Agency of the US. Therefore, it is nearly impossible to crack the SHA-256 algorithm that bitcoin gets based on. However, multiple frauds and hacks occurred at bitcoin exchanges and digital wallets where wallets get stolen, and hackers transfer users’ coins to their wallets. In all cases, the thing that got hacked was either the website of bitcoin exchange or cloud storage online, and no one has hacked the bitcoin network.
To hack the bitcoin network, an attacker requires control over 51% of nodes in existence, which is nearly impossible as the nodes keep on growing. The main reason behind all the hacks and frauds is that bitcoin is independent of central authority, and even if any error occurs while transacting bitcoin, no one can help users. For example, if you accidentally lose your private keys or password and send bitcoins to the wrong wallet address, you won’t be able to get them back by complaining.
The cryptography of bitcoin relies on complicated mathematical calculations, which are difficult for traditional computers to solve and here comes the mining process. Today, mining is only successful on high-powered computers. The mining process maintains the network of bitcoin and introduces new coins in existence. Bitcoin’s supply is a hard limit, and that is 21 million coins.