Bitcoin : A simple explanation in layman terms - My Empty Mind

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Bitcoin : A simple explanation in layman terms

Bitcoin has become a buzzword now-a-days. There has been a remarkable surge in price of bitcoin from a few dollars in 2010 to over $19,000 each in the last couple of years, so whats so special in bitcoin??
Why Bitcoin and what so special about it?
  1. A currency which never reveals the identity of the owners, this reason makes bitcoin so popular, and this only is the reason for getting this currency banned in some countries 
  2. Bitcoin is not regulated by government or any bank, making it impossible for the government or any third party to control or manipulate it.
  3. New Bitcoin can be mined by anybody.


What is Bitcoin? 

https://upload.wikimedia.org/wikipedia/commons/c/c8/BTC_number_of_transactions_per_month.png
https://upload.wikimedia.org/wikipedia/commons/c/c8/BTC_number_of_transactions_per_month.png
Bitcoin is a decentralized concurrency that uses rules of cryptography for regulation and generation.  It has a market cap of 21 billion coins causing their production to decrease and making it more valuable with time. As of now more than half of bitcoins have been generated.

Bitcoin is very similar in certain aspects to the e-wallet which we have in our mobile. People keep money in online wallets like Paytm, Ola, payzaap, or any other mobile wallets for online shopping or for buying a service, same can be done with a bitcoins as well. You can also send bitcoins to someone you want, as if you are sending money to them. Though it has lots of similarity with other online wallet but it is very different from them in many aspects such as: -

  1. Common mobile wallets store money in terms of currency like rupees, dollars etc. But bitcoin is itself a unit.  
  2. Those currencies are government recognized, but Bitcoin is not regulated by any government or Bank. They bypass government and bank regulations.
  3. The bitcoin transaction is anonymous and secret, identity of people involved in transaction is not revealed.
  4. bitcoin wallet can be stored online or offline (in USB)

Some technical jargon used in the world of bitcoin: -

  • bitcoin: - A cryptocurrency.
  • Bitcoin: - The network and the software and the system which regulates manages and controls bitcoin.
  • Wallet: - A wallet is a small personal database that you store on your computer drive, on your smartphone, on your tablet, or somewhere in the cloud.
  • Block: - A bunch of transaction on the network,
  • Transaction: - Transfer of money from one wallet to another.
  • Block chain: It’s a ledger, a final entry or final summarized report. It is open to public and has the details of transaction. Network of computer running bitcoin software maintain these block chains . All bitcoin transaction are logged and made available to public. It records every transaction and the ownership of every bitcoin in network
  • Miners: - Control the network by verifying transaction, people who mine these coins are called miners. It can be mined by anyone who has a computer. bitcoin mining involves solving of complex mathematical problem. Miners ensure that the transaction is secure and is getting processed safely.

How to obtain bitcoins?

You can obtain bitcoin by the following three methods: -
  1. Purchasing it through a bitcoin exchange.
  2. Accept it as a payment of service or goods you offer.
  3. Mining new coins.
    
     "Mining" is a term used to refer the discovery of new bitcoins. Mining process is simply the verification of bitcoin transactions happening across the Bitcoin network.

Suppose you buy a book, a product or a service from an online store which accepts bitcoin and you pay the money in bitcoin. To check the authenticity of the bitcoin, miners begin to verify the transaction. All the transactions are grouped into boxes with a virtual lock on these boxes called "block chains."

Miners run software to find the key that will open that virtual lock. If the key is found the transactions are verified. The current number of attempts to find the correct key is 1,789,546,951.05, according to Blockchain.info—a top site for the real-time bitcoin transactions. Miner gets a reward of newly generated bitcoins (perhaps 12.5 bitcoins) for finding the key.Every 210,000 blocks, or, roughly, every four years, the block reward is halved. It started at 50 Bitcoin per block in 2009, and in 2014 it was halved to 25 Bitcoins per block.

And as I said bitcoins can be mined by anybody, to do so you just need powerful computation engines with top quality hardware’s with that you can pitch into the Bitcoin to verify the transactions by doing complex mathematical computation to find the right key for the block. When any one miner succeeds in solving their math problem, they get to create a new block and receive a certain number of Bitcoins as a reward, known as “the block reward.” If You don’t want to invest much on purchasing new powerful machine, then you can join the network by adding your computer to the mining pool Pools are a collective group of bitcoin miners who pool their computer to mine bitcoin. Sites such as Bitcoin.com, BTC.com Slush’s Pool allow small miners to receive portion of bitcoins if they add their computer to the group

However, In early years of bitcoin mining with personal computers was possible. Now, the network is very competitive so using specialized hardware is the only way to earn.
Many online wallets are available on internet where you don't have to maintain the bitcoin software on your devise though you can also download the software and manage it locally in your computer of device.

From where to buy bitcoins: -
There are many online bitcoin exchanges available where you can open your bitcoin Wallet account and start doing transactions. Zebpay is one of the android mobile bitcoin wallet. You can use the following :- 
my referral code- REF30118675
or link- http://link.zebpay.com/ref/REF30118675
to get a free bitcoin wallet and earn free bitcoin worth Rs. 100.


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