Saturday, December 9, 2017

Introduction to Bitcoin. A step by step guide for beginner.

Everyone wants to earn money in short period of time and heard whatever in news and invest it before knowing its actual principle. Bitcoin is the news sensation in today. Every day thousands of people investing in bitcoin without knowing what is it?In this blog, we introduce you to bitcoin from basic terminology.

introduction to Bitcoin techferb
Techferb


Before coming to what is bitcoin you have to know some terms related to Bitcoin.

Blockchain: A chain that is formed by continuous growing records known as the block which is linked and secured together by cryptography to form a long block of a chain known as Blockchain. This technique was originally described in 1991 by a group of researchers. Each block contains data, hash(unique identity) and hash pointer by which it is linked to the previous block.
Source- Blockchain

Data that stored inside a block depends on the type of blockchain the Blockchain. For example
Bitcoin is a implementation of blockchain which stores Sender, Receiver and amount of bitcoin information.
Hash: Hash is unique identity of the block. You can compare hash with the fingerprints. It is also known as a digital signature.It is formed using binary digits. If a hacker changes a single digit, It will be no longer the same block.
Hash pointer: The third element of a block is a hash of the previous block forming using a hash pointer and this effectively creates a chain of the block.

This makes the blockchain so secure. If a single block is tempered the whole chain will be unused.

What is Bitcoin?

Bitcoin is the first decentralized digital currency, without a central bank or single administrator and money can send through the network. The network is peer-to-peer and transactions take place between the users directly.These transactions are done by implementation of the blockchain with cryptography.
This complex calculation and implementation is first done by Satoshi Nakamoto in 2009 and released as open source software.
Introduction-to-Bitcoin
Bitcoin

How are new Bitcoin created?

Bitcoins are created as a reward for the process of "Mining" known as Bitcoin Mining. Bitcoin mining has two purpose creation of a new coin and facilitates the continuation of the transaction. We can also be compared Bitcoin with gold. As the gold is mined from the ground like this bitcoin is also mined via digital means. By this mining, the bitcoin miners are rewarded. As the gold has limited supply like this the founder Satoshi Nakamoto limited the supply of the bitcoin to 21 million.
After the 21 million are mined then miner have to depend on only rewarded from transaction fees.

Bitcoin-mining


Why is the price of Bitcoin increasing exponentially?

  • limited Supply of bitcoin
  • As the major developed country like United States, Canada, Australia etc allows bitcoin exchange trading so this kick up increasing price of bitcoin.

Bitcoin vs Other investment 

It is totally different than the traditional investments. Bitcoin doesn't have middleman associated with it. Which reduces the charges for the transaction.It isn't observed by the central agency. But traditional invest have central agencies which give trust of surety.

bitcoin-stat

Is it a right time to invest?

As the supply of bitcoin is limited so there is the possibility of increasing price in later on like the gold. But bitcoin has another competitor like Ethereum, Mipple etc So there is the possibility of competition which isn't there with Gold.  As the 17 million bitcoin mining is already done. So the decision is upon you? Take decision wisely.





3 comments: