Bitcoin - The Currency Of New Era

 

Introduction:

Bitcoin is a cryptocurrency. It is basically a digital asset designed to work as a medium of exchange that uses cryptography . It uses blockchain technology and cryptography for creation, security and maintainance purposes. These coins are termed  as cryptocurrency because it uses a system of cryptography(AKA encryption) technique to control the creation of coins and to verify the transaction.

Basic Features:

• Bitcoin is a digital currency that is not tied to a bank or government .
• This will allow the user to spend money anonymously.
• It is like an online version of cash. No institution controls the Bitcoin network.

Bitcoin Public ledger:

• All confirmed transaction from the start of Bitcoin creation are stored in a public ledger.
• This complete record of transaction is kept in a sequence of block which is referred as 'blockchain'.

Evolution Of Bitcoin:

The idea of digital money-- convenient and untraceable, liberated from oversight of banks and government had been a hot topic  since the birth of Internet. Then in November 1,2008 a man named Satoshi Nakamoto, published a research paper, describing his idea about new digital currency that he called as Bitcoin.

Bitcoin did away with the 3rd party by publicly distributing the ledger what Nakamoto called the 'Blockchain'. 

                                               Now users willing to devote CPU power to running a special piece of software would be called 'miners'.  This would form a network to maintain  the blockchain collectively. In the process they would also generate new currency.

What does Bitcoin miners do:

• Bitcoin miners are the people who manages the transaction done in blockchain. 
• Basically they install a Bitcoin software in their CPU. The CPU uses it,s power to solve complex mathematical equations and as a result they provide output which can be maintained in public ledger. Higher the CPU power quickly we get the result.
• The person who solves the equation quickly will get some Bitcoin as reward.

Why  are Bitcoins valuable?

• There are lots of things which we consider  valuable like gold,silver,diamond etc.
• Even in civilization like Aztec people used coco beans as money.

         The importance of any currency depends on following points.

• Scarcity

Bitcoin is decentralized and limited. The key to the maintenance of a currency's value is its supply. A money supply that is too large could cause prices of goods to spike, resulting in economic collapse. A money supply that is too small can also cause economic problems. Monetarism is the macroeconomic concept which aims to address the role of the money supply in the health and growth (or lack thereof) in an economy.

In the case of fiat currencies, most governments around the world continue to print money as a means of controlling scarcity. Many governments operate with a preset amount of inflation which serves to drive the value of the fiat currency down. In the U.S., for instance, this rate has historically hovered around 2%.4 This is different from bitcoin, which has a flexible issuance rate which changes over time

•  Divisibility

Successful currencies are divisible into smaller incremental units. In order for a single currency system to function as a medium of exchange across all types of goods and values within an economy, it must have the flexibility associated with this divisibility. The currency must be sufficiently divisible so as to accurately reflect the value of every good or service available throughout the economy.

•  Utility 

A currency must-have utility in order to be effective. Individuals must be able to reliably trade units of the currency for goods and services. This is a primary reason why currencies developed in the first place: so that participants in a market could avoid having to barter directly for goods. Utility also requires that currencies be easily moved from one location to another. Burdensome precious metals and commodities don't easily meet this stipulation.

•  Transferability

Currencies must be easily transferred between participants in an economy in order to be useful. In fiat currency terms, this means that units of currency must be transferable within a particular country's economy as well as between nations via exchange.

•  In short, people accept and trade in Bitcoin because other people accept and trade in Bitcoin. It is recognized and accepted as a currency by many.

Pros and Cons Of Bitcoin:

Future Of Bitcoin:

Bitcoin is still is in it,s fancy stage where most people are unaware of it. It is still is in its development stage. But as people are knowing about this it,s price is increasing day by day.