|On January 3, 2009, 36 year old Japanese Satoshi Nakamoto unleashed a digital currency called Bitcoin which has revolutionized the way daily transactions are made. This currency was designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of computerized database using strong cryptography to secure transaction records to control the creation of additional coins, and to verify the transfer of coin ownership. Through out the years Bitcoin has undergone rapid growth and as the number of coins available are limited its scarcity has driven up the cost per Bitcoin. Currently standing at 1 BTC = 35,000 US at the time of this article.
Nakamoto’s goal was for this currency to be impervious to unpredictable monetary policies as well as to the predations of bankers and politicians. He wrote: “The root problem with conventional currency is all the trust that is required to make it work”. Using cryptography Nakamto solved one of the main concerns of digital currency: The danger that someone can spend the same money any number of times.
Bitcoin is a revolutionary technology that enables a new way to send payments over the internet. It is like an open accounting system where thousands of computers all over the world work together to track digital tokens called Bitcoins. Bitcoin software encrypts every transaction from a sender and a receiver. Both are only known by a string of numbers and a public record of every coin’s movement is kept for public view records. Buyers and sellers remain anonymous and everyone can see that a coin has moved from A to B. Nakamoto’s code prevents A from spending the coin a second time. The software allows people to send money directly to each other without an intermediary, and no outside party can create more coins. When you send someone bitcoins the transaction is broadcast to the entire network. After its verified, it’s recorded in a public ledger called the Block Chain. The Blockchain contains a record of every Bitcoin transaction that has occurred since the system began. Bitcoin is a peer-to-peer system so there is no central authority instead Bitcoins are issued to users who help process transactions on the network. This is known as Bitcoin Mining.
What is Bitcoin Mining?
Bitcoin miners are specialized computers that do the work to verify and record transactions in the blockchain. As a reward for their work miners earn bitcoin. This is how Bitcoins are released into circulation. The system is programmed so that only 21 Million bitcoins will ever exist. As time goes by the mining reward decreases. The result is a predictable supply governed by scarcity making bitcoin somewhat like digital gold. Bitcoin allows you to send anyone any amount of money anywhere in the world.
While there have been other versions of digital currency top world cryptographers have not been able to break or penetrate this system and many of the worlds leading cryptographic researchers have tried to find a way to exploit it but have never been able to break it. Since then Bitcoin has been adopted by many organizations who are now opting to buy Bitcoin as it becomes the worlds leading digital asset.