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Definition of Bitcoin
A bitcoin is a cryptocurrency and can be referred to as a type of electronic cash. It is a digital currency which is decentralized. It means that it is without a central bank or any other form of an administrator.
The transactions of bitcoins are verified by different networks of nodes through the cryptography and are recorded in a public distributed ledger which is known as a blockchain.
In general, it could be referred to as a digital currency which is used and as well as distributed electronically.
At a Glance
Initial release: 0.1.0 / 9 January 2009 (10 years ago)
Ledger start: 3 January 2009 (10 years ago)
Founder: Satoshi Nakamoto
Programming language: C++
History of Bitcoin
The person or the group of people who invented bitcoin still remains unknown but it was released under the alias of Satoshi Nakamoto. The true identity of Nakamoto was never found out while various people have claimed to be Satoshi Nakamoto while various others have denied being Nakamoto.
It was anticipated that Nakamoto owns more than one million bitcoins which approximately amounts to 3.6 billion dollars It was designed as a reward for the process which is known as mining and was released in the year 2009 as an open source software.
The bitcoins can be exchanged for products, services and other currencies as well. The bitcoins have been highly criticized on the grounds that it can be used illegally in transactions, it consumes electricity at a high rate, price volatility, risk of thefts from the exchanges and that a bitcoin can possibly be an economic bubble.
People have also used the bitcoins as an investment despite the investor alerts issued by various regulatory agencies.
Characteristics of Bitcoins
- It is decentralized.
- It is anonymous. Not much is known about the history of bitcoins.
- It is transparent.
- It is fast to process but the transaction is irreversible.
Bitcoin Mining Hardware and its types
There are two options available to people for bitcoin mining. These options include hardware mining and cloud mining.
Cloud mining is a process which is done remotely without any equipment for physical mining. Whereas hardware mining includes the complete package.
Generally, people prefer to set up a bitcoin miner instead of cloud mining because it gives more profit in many cases. The setting up of a bitcoin miner can be expensive and new upgraded versions are launched quite often.
- The first type of bitcoin mining hardware was the GPU/CPU Bitcoin miners but is now considered as the least powerful bitcoin miner. The mining of bitcoins is done by using the CPU of the computer. The GPU is added in order to increase the hash rate. The bitcoin mining has become quite difficult in recent years and it has become almost impossible to earn any profit for GPU/CPU bitcoin mining.
- The FPGA bitcoin miners is a designed circuit for the configuration after building. FPGA is the acronym for Field Programmable Gate Array. The hardware manufacturers can buy chips in large quantity. These chips can be customized for the bitcoin mining before they could be installed on their equipment. The performance of the FPGA bitcoin miners is a lot better than CPU/GPU bitcoin miners.
- The ASIC (Application Specific Integrated Circuits) bitcoin miners is considered the best bitcoin miner because they are comparatively fast and consume low power as compared to other bitcoin miner hardware. These were specifically designed for the sole purpose of bitcoin mining. However, this bitcoin miner is quite expensive.
Why Use Bitcoins?
There are several benefits of bitcoins as and when used as a part of the payment system or otherwise.
One of the major benefits of using bitcoins as a payment system over the traditional banks is that it allows for an international transfer of funds without the hassle of going through currency conversions.
Below is the list of benefits of bitcoins:
- It poses lower fraud risks for the buyers. Through the use of bitcoins, the buyers can proceed with the payments without disclosing any personal and financial information. One thing which the credit cards fail to offer is a specific degree of financial anonymity to the buyer which can be achieved with bitcoins.
- Bitcoins are digital cash and hence cannot be intercepted by hackers in any way. It also helps to prevent the targeted breach of data.
- Individuals can preserve coins and reduce the risk of inflation. It can be said that with the bitcoins, the risk of inflation is basically zero. Inflation occurs when the government of a country continuously issues more money for over a year and eventually reduces the purchasing power of the people. The bitcoins were designed with the main purpose of remaining finite and hence with no possibility of an issue of excess currency, there is no threat of inflation.
- The transaction fees for bitcoin payments are comparatively lower as compared to the transaction fees for debit and credit card purchases. The bitcoins can be easily used in any situation. The bitcoins have also made international transactions comparatively easy. People who use bitcoin can use the same currency in different countries.
The Downside of using Bitcoins
Everything which has its advantages will also come with some disadvantages. The use of bitcoins is encouraged in some countries while it is banned in several others. Even if it is legalized in some countries, some governments still don’t have any proper guideline for the functioning of the bitcoins.
The buyer needs an alphanumeric password in order to access their bitcoin wallet without which it cannot be used. The continuous development and the rise in its value have disheartened people from investing in it altogether.
Incredible Benefits of Bitcoins
There are various benefits of using bitcoins as a system of payment some of which are recognized while others have not come in light.
These additional benefits of bitcoins can include that there is no involvement of the third party, quick and cheap transfer or payments, international payments can be made easily, irreversible transactions, and no paperwork involved.
The bitcoins also offer various opportunities in different business ventures such as small contract, asset distribution, bitcoin mining, and wallet building technology.