What is Bitcoin?
- Bitcoin is a form of virtual currency, created in 2009 by an unknown person using the alias Satoshi Nakamoto.
- With Bitcoin you can buy goods or services using this currency as you would with dollars or euros, as long as the seller accepts bitcoins. bit coins are finite. there will be only 21 millions bit coins ever.
- Bitcoins are used for electronic purchases and transfers. Every single purchase is immediately logged digitally on a transaction log that tracks the time of purchase and who owns how many bitcoins. This way every transaction is 100% transparent giving more safety to the whole process.
- But will people know how much I am spending and on what? No, sir. Each transaction is recorded in the public log, and the names of buyers and sellers are never revealed – only their wallet IDs, keeping the transactions private.
- bit coin mechanism mainly works on block chain technology
- Satoshi is the smallest fraction of a Bitcoin that can currently be sent. as in India Paisa is smallest part of rupee .
“ In a nut shell bit coin is first decentralized currency and its value will be depend on demand and supply, not by any bank or regulator.”
Who created Bitcoin?
Bitcoin is the first implementation of a concept called “cryptocurrency”, 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. While developers are improving the software, they can’t force a change in the Bitcoin protocol because all users are free to choose what software and version they use. In order to stay compatible with each other, all users need to use software complying with the same rules. Bitcoin can only work correctly with a complete consensus among all users. Therefore, all users and developers have a strong incentive to protect this consensus.
So no government, no central bank regulate bit coins.
What are the advantages of Bitcoin?
- Payment freedom– It is possible to send and receive bitcoins anywhere in the world at any time. No bank holidays. No borders. No bureaucracy. Bitcoin allows its users to be in full control of their money.
- Choose your own fees– There is no fee to receive bitcoins, and many wallets let you control how large a fee to pay when spending. Higher fees can encourage faster confirmation of your transactions. Fees are unrelated to the amount transferred, so it’s possible to send 100,000 bitcoins for the same fee it costs to send 1 bitcoin. Additionally, merchant processors exist to assist merchants in processing transactions, converting bitcoins to fiat currency and depositing funds directly into merchants’ bank accounts daily. As these services are based on Bitcoin, they can be offered for much lower fees than with PayPal or credit card networks.
- Fewer risks for merchants– Bitcoin transactions are secure, irreversible, and do not contain customers’ sensitive or personal information. This protects merchants from losses caused by fraud or fraudulent chargebacks, and there is no need for PCI compliance. Merchants can easily expand to new markets where either credit cards are not available or fraud rates are unacceptably high. The net results are lower fees, larger markets, and fewer administrative costs.
- Security and control– Bitcoin users are in full control of their transactions; it is impossible for merchants to force unwanted or unnoticed charges as can happen with other payment methods. Bitcoin payments can be made without personal information tied to the transaction. This offers strong protection against identity theft. Bitcoin users can also protect their money with backup and encryption.
- Transparent and neutral– All information concerning the Bitcoin money supply itself is readily available on the block chain for anybody to verify and use in real-time. No individual or organization can control or manipulate the Bitcoin protocol because it is cryptographically secure. This allows the core of Bitcoin to be trusted for being completely neutral, transparent and predictable.
What are the disadvantages of Bitcoin?
- Degree of acceptance– Many people are still unaware of Bitcoin. Every day, more businesses accept bitcoins because they want the advantages of doing so, but the list remains small and still needs to grow in order to benefit from network effects.
- Volatility– The total value of bitcoins in circulation and the number of businesses using Bitcoin are still very small compared to what they could be. Therefore, relatively small events, trades, or business activities can significantly affect the price. In theory, this volatility will decrease as Bitcoin markets and the technology matures. Never before has the world seen a start-up currency, so it is truly difficult (and exciting) to imagine how it will play out.
- Ongoing development– Bitcoin software is still in beta with many incomplete features in active development. New tools, features, and services are being developed to make Bitcoin more secure and accessible to the masses. Some of these are still not ready for everyone. Most Bitcoin businesses are new and still offer no insurance. In general, Bitcoin is still in the process of maturing.
What is blockchain?
A blockchain is a public ledger of all bitcoin transactions that have ever been executed. A block is the “current” part of a blockchain which records some or all of the recent transactions, and once completed, goes into the blockchain as permanent database. Each time a block gets completed, a new block is generated. Blocks are linked to each other (like a chain) in proper linear, chronological order with every block containing a hash of the previous block. To use conventional banking as an analogy, the blockchain is like a full history of banking transactions. Bitcoin transactions are entered chronologically in a blockchain just the way bank transactions are. Meanwhile, blocks, are like individual bank statements. The full copy of the blockchain has records of every bitcoin transaction ever executed. It can thus provide insight about facts like how much value belonged to a particular address at any point in the past. Some developers have begun looking at the creation of other different blockchains as they do not believe on depending on a single blockchain. Parallel blockchains and sidechains allow for tradeoffs and improved scalability using alternative, completely independent blockchains, thus, allowing for more innovation.
In October 2016, ICICI Bank successfully executed transactions in international trade finance and remittance using blockchain technology, in partnership with Emirates NBD from the Middle East. This was the first transaction using blockchain in India
Benefits of blockchain technology as specified by Forbes are:
- As a public ledger system, blockchain records and validate each and every transaction made, which makes it secure and reliable.
- All the transactions made are authorized by miners, which makes the transactions immutable and prevent it from the threat of hacking.
- Blockchain technology discards the need of any third-party or central authority for peer-to-peer transactions.
- Decentralization of the technology.
Question based on bit coins
- who regulates bit coins?
[spoiler show=”answer”]NO one[/spoiler]
2. does rbi regulate bit coins?
[spoiler show=”Answer “]No[/spoiler]