Imagine yourself standing in the long queue of a movie hall but when your turn comes, you realize your wallet jumped from your pocket? The impatient man standing behind you is groaning by now and you’re transfixed as you can taste blood in your mouth.
What if you can save yourself from the painful embarrassment? In fact, what if you can also watch the movie? It’s all possible with Bitcoin. Promising to not throw you into a technical jargon, and without oversimplifying it either, here’s an attempt to explain bitcoin:
Table of Contents
What Is Bitcoin & How Does It Work – Explained In The Simplest Language
What Is Bitcoin?
Bitcoin is a purely decentralized digital currency. Don’t panic. With the promise intact, let’s see each of the terms individually.
Purely Decentralized
It means no administrative body or government can own or control bitcoin, unlike dollars or rupees that are under the government’s authority.
Digital Currency
It means bitcoin doesn’t exist in the form of physical money. Similar to the balance of your Paytm wallet—it can’t be touched but it can be used to buy a deodorant. You can buy bitcoin with your local currency and store it in your Bitcoin Wallet that can be kept on your computer or on your mobile devices. Also, check the different types of digital currency where still you can invest your money.
Aren’t the Paytm Wallet And the Bitcoin Same Then?
The answer is No. Your Paytm wallet is under the supervision of Paytm. When you send money to your friend through Paytm, it verifies the transaction and a bank is involved. Whereas, no third party is involved in the exchange of bitcoin.
It is fairly simple as sending an email but more private than the private chat itself because it’s not mandatory to reveal your identity. You can legally deal with bitcoin using a fictitious name or a pseudonym.
Surprisingly enough, the name behind the creation of the Bitcoin concept Satoshi Nakamoto is also a pseudonym. Yet it ensures security by keeping a secret piece of data called private key which provides the mathematical proof that the certain number of bitcoin has come from the owner.
Who Supervises Bitcoin?
Bitcoin has a peer-to-peer network where users can individually connect through an open source software by the name of Bitcoin Wallet. It suggests that everyone having a decent internet connection can be a part of the Bitcoin network.
However, people like you and I who we call Bitcoin miners handle the security of bitcoin. In return, they get an incentive in the form of new bitcoin they can own. In fact, you can also become a bitcoin miner with just a little smartness and a little more math–and that is what differs bitcoin from other digital currency.
How Are Duplication Of Coins And Double Currency Spending Prevented?
Let’s suppose there’re two users on the bitcoin network by the name of Jack and John who decide to do a transaction. Jack sends 10 bitcoins to John and they both witness the transaction. It’s not that simple. What if Jack sends a copy of those 10 digital coins to Rohn? What if he sends thousands of copies to thousands of people and declares himself a millionaire?
How about noting down the transaction in a virtual journal? But it still can be altered. Then what if we make two ledgers and give them to both Jack and John? This way if any of the two will do something illicit, the other party will identify the mismatch in their ledger. More than that, what if we record each transaction whenever they happen and make their thousands of copies to be freely open to everyone who is involved in the transaction.
In case, you think the duplicate copies of the ledger can be made, bitcoin network solves this problem using blockchain which is simply the collection of all the records in the ledger. In our case, when Jack sent 10 digital coins to John, the message of the transaction broadcast to the bitcoin network. The nodes which simply are the memory blocks in the blockchain validated the transaction and store the copy of their ledgers. After that, they transferred the message to the other nodes.
As each of the nodes stores, its own copy of the ledger, a separate list or block of valid transactions is created and distributed to each node. This way, when the same bitcoins will be used twice, the transaction will not be validated as the earlier was already recorded and stored in the block.
Watch this Video Guide if you want to know everything about Bitcoin & Bitcoin Wallet:
Some Important Links about Bitcoin:
Bitcoin Wikipedia:
https://en.bitcoin.it/wiki/Help:FAQ#What_is_Bitcoin.3F
Buy Bitcoin From Here:
https://bitcoin.org/en/buy
Original Paper On Bitcoin published by Satoshi Nakamoto:
https://bitcoin.org/en/bitcoin-paper
Download Bitcoin Core:
https://bitcoin.org/en/download
What can you buy with bitcoins?
https://www.coindesk.com/information/what-can-you-buy-with-bitcoins/
Conclusion:
Presently, there’re innumerable platforms including Microsoft, Dell, and TigerDirect where bitcoin is accepted and you can also find the nearest stores from CoinMap.org. While things look extravagant on paper, we are uncertain where the graph of bitcoin will go in the next ten or twenty years.
Wrapping Up
I hope you made use of our A Complete Guide To Bitcoin 2018, didn’t you?
In case you have any doubts regarding this, don’t forget to leave a comment below. I will reach out to you at the earliest.
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