What is Bitcoin and bitcoin mining?

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We all have been hearing this term “bitcoin” for a while and we all want to know what is it actually. Questions like “Is it a real currency? how can I earn it? ” etc. have been pondering in our minds. This article will answer all your questions. Let us know what actually it is.

Bitcoin

(Money-images from freepik)

We all have some kind of currency in our wallets which we use for our daily transactions. There is a value of every currency in the market. The governing authority controls the value of the respective currency that is most commonly the central bank of the respective country to which the currency belongs.

But, what if someone tells you that there is a currency that you can not touch or see but it can just be used for transaction and it can be stored in any storage device like memory cards and pen drives. Well, it sounds much like net banking but it is far more different than that.

Basically, bitcoin is a virtual currency. Anyone can buy it in terms of money or one can sell commodities for bitcoin. There is no specified authority to govern bitcoins. It was first started by Mr. Stoshi Nakamoto. In recent times bitcoin has flourished and became very popular.

Bitcoin is a trade currency with mutual consent. It may be denied by anyone. For example, if you believe in bitcoins but the person you want to trade with does not believe in bitcoins and says that he won’t accept it then you can not blame him for that.

Value Of Bitcoin(Bitcoin image from freepik)

The current value of one bitcoin is $8489.00. Yes, you read it right. Its value fluctuates too much but now their number has been fixed so its value may not decrease.

However, the forces of demand and supply determine the value of bitcoin. As the demand for it all over the world increases its value increases and vice-versa. However, there are many small factors that also affect its value.

Bitcoin Mining

Now that the concept of bitcoin is clear another term that bothers is “Bitcoin Mining”. Well, this does not mean that you take tools and dig the ground and find bitcoins. To understand this term one needs to understand a few things first.

When you transfer money from your bank account to any other bank account then the bank approves the transactions and maintains a record but in the case of bitcoins, there is no authority in the middle to approve the transaction.

So if you send bitcoins to somebody from your account to their account then no one is there to approve that transaction but, however, a record is maintained. While the transfer of bitcoins no one verifies that it is you who is using your account or just someone else.

So if one wants to earn bitcoins he can mine it. It simply means to work as a body who approves transactions. For this one requires a very heavy computer system as he has to solve mathematical problems. The steps for mining are as follows :

  1. You need to verify if transactions are valid or not. Only practical knowledge can give you a detailed explanation of it.
  2. Bundle all the transactions in a block.
  3. Solve proof of work problem. It is a mathematical problem which is difficult and time-consuming to produce. It is done to meet certain requirements.
  4. Then the block is added to the network and bitcoins are transferred.

After all this, you will receive some bitcoins for your whole labor.

Bitcoin mining produces new bitcoins in the market and hence increases the number of bitcoins.

Investing In Bitcoins

Investing in bitcoins is a question for all of us. Well, it is an individual choice but I will tell you some other points about bitcoin that may help in deciding.

Since there is no authority in between to watch out transactions this becomes the reason for insecurity. Another thing to know about it is that if you lose your ID and Password of your account you may lose all your bitcoins. However, the security of the transaction is enhancing day by day.

Investing in bitcoins is a good idea if you want to utilize your money. It may give you huge returns. Due to the limited value of bitcoins in the market, its value will not decrease easily.

 

This is all for this article if you have any queries feel free to comment.

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