Bitcoin is basically a digital currency which is also known as crypto currency, which was created in the year 2009 by a mysterious man named Satoshi Nakamoto. Bitcoin seeks to provide individuals with lower transaction fees as compared to other online payment systems. Unlike the other currencies that are issued by the government, bitcoin is managed by a decentralized authority. Bitcoins do not have any physical form, only their balances are kept in a public ledger along with the bitcoin transactions. These transactions are then verified with enormous amount of computing power. Bitcoins are not backed by any government or bank. Though it is not a legal tender, bitcoins have become very much popular in the recent times and this has provoked the launch of many other virtual currencies known as Altcoins.
How do they work?
First, one needs to install the bitcoin wallet on your mobile phone or a computer. After installing, your first bitcoin address will be created and you can create more whenever you want. You could then reveal this address to your friends so that you can pay them and vice versa. This is very similar to how an email works. But however, you need to keep in mind that the bitcoin address should be used only once.
Block chain- Balances
Basically, the block chain is a common public ledger on which the whole bitcoin system depends on. Only the established transactions are entered into the block chain. By this technique, the bitcoin wallets can estimate the spendable balances and the fresh transactions can be confirmed to the spending bitcoins that are truly purchased by the spender.
A transaction is primarily the transfer of value between two bitcoin wallets which gets included into the block chain. The wallet keeps a secret data that is called a private key which is used to sign the transactions. This signature provides mathematical proof that the transaction has been made by the owner of the wallet and hasn’t been altered by anyone else. Every transaction is publicized among the users and it is confirmed by the network in approximately 10 minutes by a process called mining.
Mining is a system that is used to verify the waiting transactions by adding them in the block chain. It implements a sequential order in the block chain, guards the neutrality of the system and also enables various computers to comply with the system. In order to be definite, the transaction should be embedded in a block chain that strictly fits the cryptographic rules which is then cross verified by the network. These strict rules avert the previous blocks from being modified because doing this would nullify the subsequent blocks. This process is equivalent to a competitive lottery that averts an individual from adding more new blocks in the block chains. Hence, no individual can control what transactions are included into the block chain or modify them.
How to invest in a Bitcoin?
Here is a step by step guide on how to invest in a bitcoin.
First Find A Bitcoin Wallet or Exchange
A bitcoin can be bought online and they are stored in online wallets which are in the digital form. One can select from various bitcoin exchanges that are available in India such as Coinbase, Bitxoxo, Zebpay, etc. Select the wallet based on their features such as the security, platforms that they can be used on etc.
Create An Account
Next, create an account by enrolling with the preferred bitcoin service provider. This will provide you a safe place to store your bitcoin and also give you an easy payment method to convert into your local currency in or out of bitcoin.
Add Your Bank Account
Connect your bank account with the bitcoin wallet and after carrying our some verification process your can start making use of your account to purchase bitcoin. Some of the bitcoin exchanges also give you an option of purchasing bitcoin through your debit and credit card.
Once you commence to buy a bitcoin it will directly take you to the exchange and the rate at which you can buy the bitcoin. Presently the value of bitcoin is very high so you’ll possibly be able to buy only a faction of it.