What is Bitcoin and How Does it Work – Beginner’s Guide with Infographics
Cryptocurrencies and Bitcoin
Cryptocurrencies are all the rage right now. With the value of Bitcoin appreciating almost daily, one can’t help but wonder what is cryptocurrency and why is it getting so much traction?
Simply speaking, cryptocurrencies are a form of digital currency that makes use of modern-day cryptography in order to maintain their value. Bitcoin is a type of cryptocurrency just like the dollar is a type of normal currency. Bitcoin makes use of the blockchain technology which is basically a public ledger and the Bitcoin transactions are stored in form of ledger entry inside the Blockchain. Also unlike normal currency Bitcoins aren’t produced on a regular basis but rather the total number will always remain constant.
The ledger entry keeps track of all the transactions that, that particular bitcoin has been through, and is, at least theoretically, impossible to duplicate. Thus cryptocurrencies are oblivious to counterfeiting and overproducing. However, cryptocurrencies also raise an issue about use in illegal activities, and a lack of legitimacy in certain. Bitcoins at the moment seem to be the digital replacement of precious metals like gold and silver. For more details about Bitcoin, You can read these guides:
History and Invention
In 1998, a computer engineer named Wei Dai first thought up the idea of a new form of money. This new currency would use cryptography to control its creation and transactions, as opposed to using a central authority as an exchange. At the time, this was unfeasible, simply because computers were not fast or powerful enough.
But come 2009, a person named Satoshi Nakamoto published the first proof of concept of a cryptocurrency, and so Bitcoin was born. At this point, computers and the internet had gotten powerful enough to make this cryptocurrency feasible.
And now, Bitcoins have exploded onto the scene!