Cryptocurrencies have burst into our lives extremely rapidly. Bitcoins images are everywhere. It is difficult to find a person, who has a launch to the internet and never heard about Bitcoins and other types of virtual currency. On the internet, there are also even bitcoins competition or different bitcoins games to win coins. You can even find bitcoins gift card today. Moreover, the role of the cryptocurrency today is becoming more and more important. You can invest in the business, buy different goods, exchange them into other units and so on. Several years ago, it was impossible- virtual currency at that time was just becoming well known in the society. Since that time the price of the bitcoin have grew in several times, beside the number of the owners and miners. However, all these facts do not reflect that fact, that the knowledge about cryptocurrency among the population of any country is very low. People can discus about the future of Bitcoin and at the same time do not know the principles of its work. It makes the risk of being deceived very high. That is why the main goal of this text is to shed light on cryptocurrency and form a clear view on this phenomenon of resent years.
Any considering should begin with the explaining the terms. It help to clarify the understanding the subject that we want to get – bitcoins meaning. So, what is Bitcoin? Bitcoin (abbreviated BTC) is an electronic payment system in which virtual “money” (bitcoins) is circulating. Do you have VISA or Mastercard plastic cards? Both Visa and MasterCard are also electronic payment systems. However, they use the usual currency – dollars, euro, yuans and all transactions are bank processing. The Bitcoin system uses crypto currency – a purely digital currency that does not have a binding to any global bank or economy of any country. It has its own cost (rate), formed against the backdrop of demand. It can be, for example, bitcoins wallet app.
Why bitcoin has been created? In part, the reasons for developments in the field of cryptocurrencies reveal their features: anonymity, decentralization, security, accessibility. Ideally, the Bitcoin ecosystem should ensure rapid transactions without the involvement of a third party (bank, cash desk) with a high level of security.
The whole Bitcoin system is kept on the Blockchain. If it is hard to say, the block is the continuous chain of blocks of all transactions. Closing the block occurs after the selection of the digital signature. After this, a new block can be formed. Maybe it will be better to describe in more detail words. Imagine that each transfer (transaction) in Bitcoin is recorded on a separate page. The sequence of pages forms the block.
To create a new one (to conduct a new transaction), we need to pass all previous blocks. That is, each new transaction is carried out on a chain – with processing of old blocks. The new block in the chain can begin only after the old one is finished. And all the blocks form a block. Previous ones cannot be pulled out or altered. In addition, access to the block is open to all participants of the system.That is, the block is a large open database, in which the encrypted information about all transactions is stored. Blockchain because of this make bitcoins payment secure and anonymous that is the most valuable character of Bitcoin.
This principle of the work of Blockchain can be bitcoins mining explained. The miners beside the knowledge that was described higher also need a powerful equipment. It does not mean that it is something special. It can be usual computer, but the power of electricity should be high. Computers are recommended to create coins at home because you can check how many bitcoins live you have by now.
If you can mentioned, there have been described only positive moments of the Bitcoin so far in the article. Are there any bad ones to notice? The first one is that there are limits in the system of bitcoin. First limit is about the size and the second one is about the maximum number of coins. It is done because of the thoughts of security. However, these limits interfere the increasing of the price of the coins. You can check it on the chart of the Bitcoin. The second problem is related to the legal basics of working of Bitcoin. Today’s attitude to the cryptocurrency from the side of governments is not friendly. In most states, there is no law that regulate the activity of the virtual units. It creates problems with payments. Other big problem is the volatility of the forks of the Bitcoin. There are no good tools to predict the price of them. However, in near future they are going to growth and it is good short-time investment.