Bitcoin | How Bitcoin Works?
Bitcoin is a crypto currency option. It is a form of cash. Satoshi Nakamoto, an unknown person or a group of people, invented it. It is open-source software. At first, we have to understand what is cryptocurrency.
Cryptocurrency is a kind of digital currency. It is a process that works as a medium of exchange. It uses to secure financial transactions without using the central banking system.
It maintains a technology which knows as blockchain. It handles public financial transaction database.
Blockchain is a public distributed ledger. Without the intermediaries, bitcoin network helps the transaction between users via blockchain.
How bitcoin work?
A user needs to mention the address where the bitcoin will send and the amount of bitcoin has to be mentioned in order to do the transaction.
This whole process will run in Forth-like scripting language. Bitcoin prevents double spending. Transaction is able to consist more than one input or output.
Bitcoin can also handle multiple recipients during the transaction.
The number of inputs and the number of outputs are main measuring point for the size of transactions. There is a term called mining which means the process that adds the transaction records to the blockchain.
In Spite of being the optional, which transaction should be processed can choose by miners. Transaction with higher fees prioritize by this mining method.
Benefits of Bitcoin
Bitcoin is independent from any other banks, corporations or world governments. It has no central authority that will censor or interfere with transactions.
It is a low cost transaction system. It has fast peer-to-peer transactions between people.
Users of Bitcoin
Bitcoin is pseudo-anonymous. So how many people uses bitcoin is very difficult to determine with accuracy. But estimation can be possible. At present, 28.5 million bitcoin wallets exist.
In bitcoin, a wallet means a storage that stores information regarding to the transaction of bitcoin. As bitcoin is a cryptocurrency option, so cryptography rules are applied by using public and private cryptographic keys.
Mainly these keys are stored in these wallets.
According to Bitinfocharts.com, these wallets hold more than 0.001 BTC (one bitcoin). One bitcoin user can keep several bitcoin wallets.
They can also use multiple wallet addresses to increase their financial privacy during the transaction in bitcoin.
So in total, 28.5 million is the approximate number of bitcoin users.
Coinbase is the most popular exchange provider and bitcoin wallet. It is available in 32 countries. It has reported that between 13 million and 28.5 million is the assumed number of bitcoin users.
China, South Korea and Japan are the countries where the largest bitcoin economies are producing.
Bitcoin as a cryptocurrency causes the demand of graphic cards. It gives a rise to the GPU prices. Nation or state cannot shut down this system according to their wish due to bitcoin’s decentralized nature.
So the legal issue related to bitcoin varies from country to country. It changes the definition of money and successfully appeared in a U.S. supreme court.
Learn About Other Crypto-currency like Bitcoin
- Ethereum : Insight Overview
- LiteCoin: Silver Coin In Details