What is Bitcoin and how does it work.

Bitcoin

What is Bitcoin and how does it work.

Bitcoin is an application of block chain technology, and it basically a part of cryptocurrencies, there are more like ether, ripple, and Lite coin etc. It is called cryptocurrency just because it is based on cryptographic hash functions or values.

Bitcoin is in hype nowadays, because bitcoins transactions are stored in a public ledger or decentralised database, any body can see those transaction publicly and verify data. Bitcoins provides authenticity and integrity of transactions and a bitcoin can not be added back to a block until it is expended and wiped out from ledger. If a transaction takes place in a network everybody receive information about the transaction in the network.

There is no government or central bank involved in bitcoin transaction, therefore, there must be someone to maintain and update all transactions taking place in a particular network. The person who is responsible of maintaining all data and transactions is called a cryptocurrency miner, or crypto miner.

Bitcoin is acceptable in most of the countries but some deny bitcoins just because of illegal activities. Bitcoins are popular because you can send them to anyone all over the world without any charges, and takes a few seconds to add that transaction in related ledgers.

Another advantage of bitcoin is the same value all over the world and you can exchange them any time anywhere across countries without any issues and charges.

You can make payments, pay bills, shopping online and much more with bitcoins. It is kind of an asset which gets value increased and decreased as per many factors.

How Bitcoin gets value?

1. Bitcoin gets value or fluctuations in price depends on the limited number of bitcoins ever generated, it is said that there is only 21 million whole unit of bit coin can be generated. So quantity does matter to give it a price value.

2. Electricity provided to secure and  run block chain network also matters because block chain network consumes electricity which is enough for a city or seldom a country.

3. Another factor of price  value hike is competitions among miners, it is said that, in every ten minute a block is generated and added in block chain to maintain bulk of transactions. 

4. Bitcoin hype among people also a factor of price tagging.

5. Media reviews on bitcoins which might be negative and positive so it gets fluctuation in value accordingly.

6. Government issues with legal terms impact directly on price tag, most of the countries does not  give bitcoins as official currency status, because it is used for illegal activities, but most of the countries allow and give them official currency status.

7. Complication of calculating of mathematical terms like hash functions or sometimes called "Proof Of work" matters in price tag.

Now, Hazards of buying a bitcoin.

There is no central bank or government involve in bitcoin transactions therefore it is not safe. If someone does counterfeit with you, there is no one to complain.

This is not legal in most of the countries because bitcoins are mostly used in illegal activities like drugs, trafficking etc etc. So if your country bans bitcoins anytime you will be in great loss or sometimes you get back nothing.

It was a brief description about bit coin to learn more about crypto mining keep following my blog and youtube channel.