Last update on .

bitcoin
bitcoin

Bitcoin is crypto currency. It is a piece of digital information that you can hold and has certain value, a shared code that creates global payment network. It is also associated with terms like 'internet of money', 'advanced money' etc. Bitcoin is a decentralized digital currency. This means that an owner can acquire and transact Bitcoin without the interference of middleman such as banks or any money lending organization.

Although the concept of Bitcoin had made its rounds in late 1980's, it received its first ever breakthrough in the year 2008 when Satoshi Nakamoto(undisclosed identity) published a paper titled "BITCOIN: A Peer-to-Peer Electronic Cash System". This paper explained the working of a system that would help in transaction of digital currency while keeping it decentralized. The framework of this paper was governed by pure mathematical rules. No one could change these mathematical rules. Nakamoto also launched an open source platform for enthusiasts to earn Bitcoin and experiment with them.

Initially when a person installs this open source software, they are awarded with some Bitcoin. This makes them a Bitcoin owner. But if anything is digital, it can be easily copied. This problem is resolved with the concept of 'double sends'. It means that if you send the same Bitcoin transaction to two people, one gets valid and other gets ignored. Bitcoin miners who validated this Bitcoin transaction making sure no one cheats, are awarded additional Bitcoin. The Bitcoin database is called Block chain which is similar to ledgers in a bank. When Bitcoin is sent from one user to another, the new owner receives a unique key that allows him to acquire control over that part of the database. Unlike banks that are governed by a set of rules and regulations that prohibit transparency to its customers, Block chain is a publicly distributed data system that keeps a record of every Bitcoin existed and Transacted. This eliminates any chance of fraud.

Bank database contains personal information that is always at a risk of getting hacked. Moreover, there are many people who do not own a bank account. With the help of Bitcoin, they can own a valuable commodity without having to go through the traditional process of opening bank accounts.
This unique feature has allowed many countries to initiate welfare activities for the underprivileged . In recent news, Finland has given refugees identity cards that use block chain technology since they usually don't have enough documents to go through traditional bank process to get themselves authorized . This helps the refugees have an authenticated digital identity and avail employment opportunities.

There are a lot of questions and uncertainty revolving Bitcoin. But as technology advances, it could rule out complete government control over currency and reduce taxation. Being a publicly distributed database system, anyone can own Bitcoin hence reducing number to people below poverty line.

Comments

No comments yet.