How does Bitcoin Work?

1,472 Views Updated: 09 Sep 2017
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How does Bitcoin Work?

Ever heard about a Bitcoin currency? Ever heard that a currency is free from governmental restrictions yet legal? If not, then now is the time to know what we are talking about.  

Bitcoins: How does it work, how much is a bitcoin worth, how to use a Bitcoin and how does Bitcoin make money is all that you need to know. 

Bitcoin - What Is It?

Bitcoin is a virtual and electronic currency which is also known as the cryptocurrency. It's a form of public money that is digital and created with the help of mathematical computations. Essentially, Bitcoins are converted electronically into long strings of codes that retain monetary value. 

Bitcoins actually take away the power of higher authorities for making money and gives it to the general public. When it comes to law enforcement, Bitcoins are even above that level. Bitcoin accounts cannot be frozen or be supervised by tax men. The currency is much ahead of the traditional policing. Bitcoins are the future of money originated by the internet and is embraced as an innovative form of monetary exchange.

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(Image Courtesy: The Logical Indian)

How Does Bitcoin Work?

Here is the Bitcoin technology explained. Once you install the Bitcoin wallet on your smartphone or computer, your initial Bitcoin address will be generated. So, this wallet acts like your personal database which can be stored anywhere from your computer to a cloud service.

These are designed to be self-contained, and there's no need to involve any middlemen for storage or movement. Bitcoins are basically traded from one personal wallet to the other, and they behave like gold coins in your pocket. You can make online purchases or just save them like shares in the hope that value increases. Bitcoins are forgery-resistant, and it's almost impossible to manipulate their financial systems.

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(Image Courtesy: Bitcoin Organisation)

How To Use Bitcoins?

You will have to first buy Bitcoin (through real transactions) either from your credit or the debit card. The entire Bitcoin network relies on the blockchain technology where all the balances are calculated, transactions are made, and the Bitcoins are owned. Each transaction makes use of a private key that signs the transactions to prevent alterations. Processing of the same happens through a distributed consensus system to verify the entire process. Each Bitcoin can be traced from input to the amount and the output. And it is through the Bitcoin wallet that once you can make any kinds of online purchases or sell off the entire thing, whenever required. 

How Much Is A Bitcoin Worth?

In a layman's language, a Bitcoin is worth a lot of money. Only around 21 million coins can ever be created, hence their value touches the sky. One doesn't have to buy a complete Bitcoin but can do so in parts. 

As of today, 7th September 2017 the value of 1 Bitcoin stands at 4565.43 USD. 

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(Image Courtesy: Afr)

How Does Bitcoin Make Money?

Bitcoins are completely decentralized and don't link with any financial institutions. There is an official website, however, no official Bitcoin organization or any spokesperson. The system isn't surrounded by any kind of human greed or manipulation but driven exclusively by expert encryption protocols. It's a free and open source, and no person makes money for creating the program. However, people who are mining are awarded Bitcoins as incentives. Miner’s job is important as without a miner, no Bitcoin transaction can ever be validated.

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(Featured Image Courtesy: Coin Desk)

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Posted by: Deepak Posts: (8) Opinions: (19) Points: 990 Rank: 80
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Great post i must say, thanks for this!
buy bitcoin instantly was the next search i made after reading it!

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