Haven’t we lately found everyone around us and even ourselves asking this question way too often – What is Bitcoin and how does it all work?
To answer the question we first have to know what is a cryptocurrency.
In layman’s terms, cryptocurrency is a bunch of code – yes, literally a piece of code, written on a computer, which is protected by cryptography. Cryptocurrencies work on the technology called – blockchain.
Blockchain is a chain made up of different blocks which contain data stored in a highly protected manner that it is nearly impossible to manipulate, hack or steal from the system. These blocks are records of the transactions that take place on the blockchain. It is decentralized as no central authority or individual is controlling or tracking the data flow. This technology is what makes Bitcoin and all the other cryptocurrencies secure and trustworthy.
What is Bitcoin and How Does it Work?
So coming back to our main question – What is Bitcoin and how does it work?
Bitcoin is a piece of code, written on a computer, backed up by blockchain technology which enables us to buy different types of goods and services. It is an open-source software whose code is available for everyone on the internet – literally, anyone can have a look at it. Bitcoin is not printed cash by any government or any authority and neither can we hold it in our hands physically.
In the year 2008, an anonymous person or a group of people under the name of Satoshi Nakamoto introduced the whole concept of Bitcoin to people via the internet and later published it as open-source software. Till the year 2010, Satoshi worked with a number of open-source developers to work on this project.
The real identity of Satoshi Nakamoto and his/her whereabouts are still a mystery to the common people. The purpose behind Satoshi’s innovation was to create a way where people could send money to each other without a middleman or a central authority (i.e., Banks) controlling the supply of the currency. To give an alternative to the banking system, blockchain acts as a digital ledger maintained by a network of people that record every transaction. So whenever we send a Bitcoin to someone, that transaction is circulated to the entire network. It is then verified and recorded in the public ledger. It is like an open accounting framework that computers all over the world record to track the possession of BTCs.
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People now more than ever are gaining attention towards Bitcoin and other cryptocurrencies like Cardano (ADA), PolkaDot (DOT), Ethereum (ETH), and many more.
CEOs of big companies and huge investors are now more confident in the decentralization concept and have started acquiring some crypto-based assets. Elon Musk – CEO of SpaceX and Tesla, Jack Dorsey – founder and CEO of Twitter, Michael Sailor CEO of MicroStrategy are some of the biggest investors who recently bought massive amounts of Bitcoin (over 200 million dollars).
In 2010, if you owned 50 BTC – you would effectively own 2-3 dollars.
In 2017, if you owned 50 BTC – you would effectively own 950,000 dollars.
Finally in 2021, if you luckily own 50 BTC – you would effectively own 2.75 million dollars.
Cryptocurrency is quickly becoming a mainstream investment option—one that the average investor has to take note of.
The price of 1 Bitcoin (BTC) as of 03 May 2021 is approximately $56,905.
It is believed that Bitcoin will take over the banking system in the same way E-mails took over the postal service. The future is ours to build and with innovative techs like blockchain and cryptocurrencies anything can be possible for us humans.
