Bitcoin which was launched in 2009, was the first kind of asset known as cryptocurrency which is a decentralized form of digital cash that can eliminate the requirement for traditional intermediaries such as banks and governments in order to make financial transactions. Moreover, bitcoins can be changed into any type of currency like btc to inr.
Bitcoin is usually powered through a combination of peer-to-peer technology which is a network of individuals like the volunteer editors who can create Wikipedia and also software-driven cryptography which is a science of passing on secret information that can only be read by the sender and also receiver.
What all required is an electronic type of payment system that is based on cryptographic proof instead of trust, thus allowing any of the two willing parties to transact directly with each other without the requirement of a trusted third party”, wrote Satoshi Nakamoto who is a mysterious bitcoin creator.
How does bitcoin work?
Each of the bitcoin is basically a computer file that is stored in a digital type of wallet on either a computer or a smartphone. In order to understand the working of bitcoin, we should know the following terms-
- Blockchain- bitcoin is basically powered by an open-source code which is called blockchain, that creates a shared public ledger. Each of the transaction is a ‘block’ which is ‘chained’ to the code, thus creating a permanent type of record of every single transaction.
- Private and public keys- usually a bitcoin wallet has a public key and also a private key that works together in order to allow the owner to begin and also digitally sign transactions, thus providing the proof for authorization.
- Bitcoin miners- miners then confirm the transaction by using high-speed computers.