Bitcoin: The New Age Digital Currency


As of 25 June 2017 and growing there were more than 900 crypto currencies available over the internet. New crypto currency can be created any time. By market capitalization, Bitcoin is currently the largest blockchain network, followed by Ethereum, Ripple and Litecoin.

What is Bitcoin?

Bitcoin is a consensus network that enables a new payment system and completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet.

Who created Bitcoin?

Bitcoin is the first implementation of a concept called “crypto currency”, which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. The first Bitcoin specification and proof of concept was published in 2009 in a cryptography mailing list by Satoshi Nakamoto.

Who controls the Bitcoin network?

Nobody owns the Bitcoin network much like no one owns the technology behind email. Bitcoin is controlled by all Bitcoin users around the world.

How does Bitcoin work?

Bitcoin is nothing more than a mobile application or computer program that provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them.

Blockchain technology is the foundation on which bitcoins function. Blockchain is a ‘digital ledger’, which will record and track all transactions in ‘blocks’ through a public ledger. This activity of processing transactions and updating the ledger in real time can be done by any user utilizing computing power of specialized hardware and they would earn bitcoins in return for their services. These users are called miners and the activity is called bitcoin mining.

Every single transaction is authenticated by every single user making fraudulent transactions difficult. The public ledger contains each and every transaction ever processed, allowing a user’s computer to verify the validity of each transaction, all done in real time. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own bitcoin addresses.

EDGE OVER TRADITIONAL MODES OF PAYMENT

Bitcoins provide the flexibility to make payments for online purchases anywhere in the world, irrespective of time, holidays and it eliminates exchange rate hassles. It also enables one to process transactions at lower costs and no personal information is tied to the transactions, which provides complete anonymity. Transactions once recorded cannot be erased and, hence, are not subject to manipulation as they are cryptographically secure. Currently, on account of its uncertain legal status, it is viewed more as on alternative investment asset class rather than a pseudo currency to transact online.

Is Bitcoin really used by people?

Yes. There are a growing number of businesses and Individuals using bitcoin. This includes brick-and-mortar businesses like restaurants, apartments, and law firms, as well as popular online services such as Namecheap, Overstock.com, and Reddit. While Bitcoin remains a relatively new phenomenon, it is growing fast. At the end of April 2017, the total value of all existing bitcoins exceeded 20 billion US dollars, with millions of dollars worth of bitcoins exchanged daily.

How does one acquire bitcoins?

While it may be possible to find individuals who wish to sell bitcoins in exchange for a credit card or PayPal payment, most exchanges do not allow funding via these payment methods. This is due to cases where someone buys bitcoins with PayPal, and then reverses their half of the transaction. This is commonly referred to as a charge-back.

The 6 Most Important Crypto-currencies Other Than Bitcoin

1) Litecoin (LTC)

Litecoin, launched in the year 2011, was among the initial crypto currencies following bitcoin and was often referred to as ‘silver to Bitcoin’s gold.’ It was created by Charlie Lee, a MIT graduate and former Google engineer. Litecoin is based on an open source global payment network that is not controlled by any central authority and uses “scrypt” as a proof of work, which can be decoded with the help of CPUs of consumer grade. Although Litecoin is like Bitcoin in many ways, it has a faster block generation rate and hence offers a faster transaction confirmation. Other than developers, there are a growing number of merchants who accept Litecoin.

2) Ethereum (ETH)

Launched in 2015, Ethereum is a decentralized software platform that enables Smart Contracts and Distributed Applications to be built and run without any downtime, fraud, control or interference from a third party. During 2014, Ethereum had launched a pre-sale for ether which had received an overwhelming response. The applications on Ethereum are run on its platform-specific cryptographic token, ether. Ether is like a vehicle for moving around on the Ethereum platform, and is sought by mostly developers looking to develop and run applications inside Ethereum. In 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC). Ethereum has a market capitalization of $4.46 billion, second after Bitcoin among all cyrptocurrencies.

3) Zcash (ZEC)

Zcash, a decentralized and open-source cryptocurrency launched in the latter part of 2016, looks promising. “If Bitcoin is like http for money, Zcash is https,” is how Zcash defines itself. Zcash offers privacy and selective transparency of transactions. Zcash offers its users the choice of ‘shielded’ transactions, which allow for content to be encrypted using advanced cryptographic technique or zero-knowledge proof construction called a zk-SNARK developed by its team.

4) Dash

Dash (originally known as Darkcoin) is a more secretive version of Bitcoin. Dash offers more anonymity as it works on a decentralized mastercode network that makes transactions almost untraceably. Launched in January 2014, this cryptocurrency was created and developed by Evan Duffield and can be mined using a CPU or GPU. In March 2015, ‘Darkcoin’ was rebranded to Dash, which stands for Digital Cash and operates under the ticker – DASH.

5) Ripple (XRP)

Ripple is a real-time global settlement network that offers instant, certain and low-cost international payments. Ripple “enables banks to settle cross-border payments in real time, with end-to-end transparency, and at lower costs.” Released in 2012, Ripple currency has a market capitalization of $1.26 billion.

6) Monero (XMR)

Monero is a secure, private and untraceable currency. This open source cryptocurrency was launched in April 2014 and soon spiked great interest among the cryptography community and enthusiasts. Monero has been launched with a strong focus on decentralization and scalability, and enables complete privacy by using a special technique called ‘ring signatures.’

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