Bitcoins Right Now
Check the Current Price of Bitcoin Here
Detailed History of Bitcoin
Merely 12 years ago, on 31st October 2008, a person named Satoshi Nakamoto published a paper on the Internet Satoshi’s main motive was clearly evident from the first line of the paper A version of electronic cash that would allow payments to be sent directly from one party to another party without going through a financial institution Cryptocurrency is a digital asset over which central banks or financial institutions have no control or regulation, For instance, the US dollar is controlled by the central bank of US.
The Indian Rupee is controlled by the RBI But there is no central bank or any main financial institution that controls the bitcoins/cryptocurrencies Back then, cryptocurrency was merely an idea in the mind of that person. But now, there is trading worth lakhs and crores on its crypto exchange just like shares are traded on the normal stock markets
In order to understand the paper Satoshi and the context of cryptocurrency :
We will have to understand some concepts of our economic history
Our financial systems are based on trust The currency notes and coins have value in our society because they are guaranteed by the government and the central bank Take a look at any note in your wallet. For example, a 200 hundred rupee note. It reads- “I promise to pay the bearer a sum of 200 hundred rupees.” This is a promise made by the Governor of the Central Bank, that is, the Reserve Bank.
There is his signature right below This note holds no value without this promise/guarantee This note will be reduced to ordinary paper if it does not carry this signature There is a small, but interesting story in this context After the Second World War, America became the most powerful country in the world and the rest of the countries had to align their currency with the US dollar And what was the US dollar aligned with/guaranteed by? A reserve of gold.
The actual value is that of gold or silver. But it is not practical to carry gold or silver around in your pocket The currency notes were printed for convenience. But US did away with this gold standard rule back in 1971 After that, the central banks of the rest of the countries could print their notes as per their wishes But what do cryptocurrencies and Bitcoin have to do with this?
It helps you to guess how powerful the government and the banks- especially, the central banks of the country are as far as monetary policy is concerned The fact of the matter is that when you deposit your money in the banks, you give the banks permission to play with that money, in one sense Making use of these deposits, the banks give loans to companies and individuals This is what fetches returns, that is, interest on the money that you have deposited Very recently, we have seen that these banks use these savings and deposits in a very irresponsible manner.
It happens quite often that banks give loans to big industrialists without performing adequate checks and then these loans become bad debts/NPAs And who becomes the victim in such cases? Depositors like us. In the last 15 months, three deposit-taking institutions have failed- Yes Bank, PMC bank and Laxmi Vilas bank But even the decisions of the government can put the common man in danger
Do you now understand the original idea/vision of Satoshi? Satoshi imagined Bitcoin as an alternate financial system that would be based on software technology and would be outside the control of third parties You might be able to recall the Global Economic Meltdown of 2008 Mega investment bankers like the Lehman brothers had become bankrupt Cryptocurrencies were born right after this scenario Bitcoin was the first to arrive.
And then many other cryptocurrencies surfaced- Ethereum, Litecoin, and Ripple In fact, at the beginning of the year, more than 2000 cryptocurrencies were available on the internet.
Let us move on to the main point now:
How does Bitcoin /crypto-technology work?
If truth be told, in order to understand this, one needs to have knowledge of advanced mathematics and computer science- which I don’t have But if you want to start investment or trading, then basic knowledge would suffice Let us take the example of Bitcoins There is one public account in digital form, of all the bitcoin transactions- this is called a ‘ledger’ A copy of this ledger exists on all the systems that are a part of the Bitcoin network
Those that run this system are called ‘Miners’ The job of the miners is to verify transactions Say, A has to transfer 2 Bitcoins to B’s account Miners will have to confirm whether A actually does have 2 Bitcoins in his account or not To complete the transaction, miners will have to solve a complicated mathematical equation You might have studied about variables back in school.
Every Bitcoin transaction has a unique variable The job of the miners is to calculate it It’s not that they sit with a pen or paper to solve the equations All these calculations are carried out on the computers automatically because they are extremely complicated and their combinations run in crores which is why these miners require computers with very complex and high processing power Once the equation is solved, the other computers within the network confirm it and this transaction is added to the chain A block of transactions gets created.
And hence, the technology is called ‘block chain’ what do miners get in exchange for this? They get the most valuable thing- Bitcoins! This system is called ‘Proof of work’ The miners have to prove the computation work they do in order to get awarded the Bitcoins in return If all this explanation went straight above your head like a bouncer, then do not worry! Because understanding the philosophy, vision, and future of crypto technology is far more important than understanding the working of crypto technology now comes the question of how to use cryptocurrency and Bitcoin.
s It is extremely important to understand that as well. Because on one hand, some people use Bitcoins as an investment while on the other hand, some people use cryptocurrency as an alternate currency A lot of people want to replace it with currency and use Bitcoins in place of rupees and dollars But the main use of cryptocurrency at present is like an investment We invest money in cryptocurrency hoping for a higher return in the future and hence get more money in return This, then becomes a “store of value”, just like Gold.
Just like we don’t use gold in our daily transactions but instead buy it and store it in the bank lockers like a guarantee to get more returns in the future because the price of gold keeps rising gradually People do the same with Bitcoins and this is why Bitcoins are also called “Digital Gold” But just like any other investment, this too, entails risks. And those who criticize this as a form of investment say that Bitcoin is a digital currency.
It has no inherent value of its own For example, you can physically touch the gold in your hands. If you buy a house as an investment, it will be physically available to you Bitcoins, on the other hand, are not physical. Everything is happening on the computer It could still be referred to as a “niche product” that does not have widespread acceptance in society.
Cryptocurrency is not yet a medium of exchange, that is, you cannot go to the nearby shops and buy bread and eggs with Bitcoins But this trend might change in the future because there are several restaurants and hotels in Western countries that have begun to accept Bitcoins as an alternative form of payment There is a technical challenge here that makes it difficult to use Bitcoins as a medium of in daily transactions The Bitcoin transactions on the blockchain take time to get confirmed.
One block process takes around 10 minutes for the computers to calculate So, you can understand that it is not practical to wait for 10 minutes for a transaction to get completed in daily life But at the same time, there are some present-day use cases for Bitcoins where they work better than our traditional ways The best example of this is our Foreign Funds transfer When you have to transfer money from one country to another, the banks deduct a lump sum in the name of foreign transfer fees.
They charge a lot of fees and take a lot of time to transfer money from one country to another Bitcoins are more economical in this case. Bitcoins do not charge any transfer fees and ten minutes is much lesser time as compared to the 1 to 2 days that the banks take A similar thing applies to credit card fees Cryptocurrency can be more economical than credit card fees.
This is why banks, credit card companies, and remittance companies have been against Cryptocurrencies and are so even today because Cryptocurrency can become a rival to their business model In the last few months, especially due to the Covid pandemic, situations have changed. While several industries and mutual funds have been struggling, the value of Cryptocurrencies like Bitcoins and Ethereum has been on the rise.
From the 1st of March, until November 30, the value of Bitcoin has risen more than 120%, that is, it has more than doubled in value Paypal, the world’s biggest digital payments company, has introduced the feature of crypto transactions in November J P Morgan Bank used to be the biggest foe of Bitcoins.
When Bitcoin was on a bull run in 2017, that is, when its price was rising exponentially, the CEO of JP Morgan said that it was a fraud And now, just a few months ago, J P Morgan opened corporate accounts for famous crypto exchanges like Coinbase and Gemini Trust So you can see how the doors that had earlier been shut for cryptocurrency have now been opening up An open-mindedness is being observed with regard to cryptocurrency in the general public and the financial industry.
Cryptocurrencies and Bitcoins could play an important role in the future of finance It remains to be seen whether cryptocurrency can become a medium of exchange that will be subject to widespread use or will it remain a store of value investment. Will you be able to buy bread and eggs from your nearby shops
with Bitcoins in the future?
or will it not be possible?
That day might be very far but it cannot be ruled out as impossible that easily I hope you would have enjoyed this Article. Click Here Here to Explore Related Articles .Visit webworldinfo for Exclusive Content.