Bitcoin is all over the news as it has touched an all-time high above $10,000; and boy, it is making people rich. We tell you what Bitcoin is and how can you buy it.
Some call Bitcoin a worldwide payment system, some an innovative payment network, and some a new kind of money. Bitcoin is all over the news as it has touched an all-time high at $11,000, plunged to $9,000 and soon recovered to $10,600, all in one day; and boy, it is making people rich. This new fad in the digital world is making everyone go crazy after it for many reasons — what is it, how does it work and who invented it? Well, here’s an answer to most of it — if not all of it.
What is Bitcoin?
Bitcoin is a type of cryptocurrency, a digital currency which uses encryption techniques to regulate the generation of units of currency and verify the transfer of funds. It is like the money, with no physical presence but a series of codes. What makes Bitcoin more interesting is that it does not even have a legal backing from many Central Banks around the world. In short, Bitcoin is just like the money with no physical presence and no sovereign value — it is digital and private.
Who invented Bitcoin?
Nobody knows for sure. A person using the name Satoshi Nakamoto invented Bitcoin in 2009. When it went online in 2009, it carried a message: “The Times 03/January/2009 Chancellor on brink of second bailout for banks”. It was an effort to create, perhaps, a parallel currency system free from government regulation. Santoshi Nakamoto currently owns some $ 7.5 billion worth of the currency.
How does Bitcoin work?
Bitcoin is traded on exchanges using the blockchain technology. The blockchain is a digital and public ledger through which transactions made in digital currencies are recorded chronologically and publicly.
What makes Bitcoin desirable?
Some believe that since it is a private and digital currency, it may be immune to government intervention or manipulation and makes it an alluring alternative to the mainstream currency. Moreover, trading in Bitcoin is not bound by international borders, one can buy it anonymously and do trading without any digital transaction fee.
How does it work if it is not real money?
Bitcoin has no legal value and fundamental backing but there are many e-commerce platforms such as Flipkart and MakeMyTrip in India that allow Bitcoin to purchase their voucher programmes. Around the world, there are many merchants that consider Bitcoin in return for their goods and services. You can buy pizza or get a manicure done in return for Bitcoins.
What’s the problem?
The problem is that in many parts of the world Bitcoin is illegal. Since it does not have any underlying asset or value-base, it is like a bubble which can burst anytime and when if it does, the question is who would be held accountable for the loss of real money? “You can’t have a business where people can invent a currency out of thin air,” top banker Jamie Dimon said labelling it a ‘fraud’.
How to buy Bitcoins?
Anyone buy Bitcoins from various apps called ‘bitcoin exchanges’, and anonymously. These apps allow people to buy and sell Bitcoins in different currencies. Mt Gox is the largest bitcoin exchange. In India, Zebpay, Coinsecure and Unocoin are popular bitcoin trading apps.
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