What is a Bitcoin and how does it work?
What is Bitcoin?
Bitcoin is a decentralized digital currency aka cryptocurrency that you can buy, sell and exchange directly, without an intermediary like a bank. Bitcoin’s creator, Satoshi Nakamoto, originally described the need for “an electronic payment system based on cryptographic proof instead of trust.” Bitcoin is owned by no one but entire world’s community. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen.
How Bitcoin work?
Each Bitcoin is basically a computer file which is stored in a ‘digital wallet’ app on a smartphone or computer. People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people. Every single transaction is recorded in a public list called the blockchain.
This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies or undo-ing transactions.
How can i get Bitcoin?
By mining, you can earn cryptocurrency without having to put down money for it. Bitcoin miners receive Bitcoin as a reward for completing “blocks” of verified transactions which are added to the blockchain.
What is Bitcoin mining?
Let’s say you had one legitimate $20 bill and one counterfeit of that same $20. If you were to try to spend both the real bill and the fake one, someone that took the trouble of looking at both of the bills’ serial numbers would see that they were the same number, and thus one of them had to be false. What a Bitcoin miner does is analogous to that—they check transactions to make sure that users have not illegitimately tried to spend the same bitcoin twice. This isn’t a perfect analogy—we’ll explain in more detail below.
Once miners have verified 1 MB (megabyte) worth of bitcoin transactions, known as a “block,” those miners are eligible to be rewarded with a quantity of bitcoin (more about the bitcoin reward below as well).
How to do Bitcoin mining?
Nowadays, Bitcoins are mined by special hardware designated just for mining Bitcoins or other currencies based on the same algorithm. It is called ASIC (Application-Specific Integrated Circuit chips), uses less energy and mines Bitcoins much faster.
What is cryptocurrency?
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers.
Is bitcoin is legal?
However, buying Bitcoin is absolutely legal in India. There is no law prohibiting Indians from buying/selling cryptocurrencies in India. He said that there was a banking ban between July 2018 – March 2020 due to which cryptocurrency exchanges were not able to hold bank accounts.