There has been a plenty of talk over Cryptocurrencies and Bitcoins in 2017. According to some pioneers like Bill Gates, Cryptocurrencies are going to evaluate the world economy. Where the well-known Philanthropist Warner Buffet considers bitcoins nothing more than a Bubble.
So in this blog, I have explained you pretty much everything about Cryptocurrencies and Bitcoins in a short and simple way.
Technically the idea of a Cryptocurrency was being tinkered with decades ago. But it wasn’t truly successful until 2009, when Bitcoin was conceived.
Bitcoins were first invented in the year 2009 by the man named Satoshi Nakamoto. Though there are many controversies related to this theory, in the same time, this is the most reliable one.
Though Bitcoins are the most popular and first ever cryptocurrencies, there are 1300 lesser known investable cryptocurrencies like Ethereum, Ripple, litecone, Monero etc.
In layman’s terms, cryptocurrencies are electronic decentralized currencies. Unlike normal currencies, cryptocurrencies are not tangable.
You can’t pick up a bitcoin and hold it in your hand, or pull one out of your wallet.
Actually, Bitcoins are blocks of ultra-secure data that are treated like money.
Working & Difference :
Unlike normal currencies, cryptocurrencies are decentralized. Means there is no central authority like Federal or Reserve Bank who operates all the factors.
Let’s see it in this way,
If Ron wants to send some money to Harry over the internet, then the Bank will be working like a mediator. The Bank secures and verifies the transaction and as a transaction fee, the bank will receive some amount of money.
In case of cross-border transactions, the transaction fees might be high & the time required for it is much higher.
But the cryptocurrency scenario is something else. In case of a Bitcoin transaction instead of a central authority, there are different random people of Bitcoin network who verify the transaction & complete it. These people are called Miners.
Bitcoin Transactions are very similar to the BitTorrent file sharing system. When you are downloading a file over BitTorrent, you are not downloading it from one specific server, but instead, there are many other people like yourself who have parts of the file in their computers.
While the traditional transaction system is like downloading a song from Sound Cloud. Where all the files are downloading from one specific server.
Now let’s talk about the security aspect of the cryptocurrencies :
Bitcoin uses advanced level of cryptography named blockchain technology to secure the transactions. That’s why bitcoins are impossible to fake. Which means though traditional currencies could be faked or replicated, bitcoins couldn’t be faked.
Now, you might be thinking How the Bitcoins are being created?
The Miner aspect of Cryptocurrencies, make them self-sustainable.
Actually, Bitcoin transactions need high computing power.
And the miners let the bitcoin network to use their computers for it.
And as a reward, they get some amount of Bitcoins for each transaction. And the most interesting thing is, these rewarded bitcoins are actually the newly generated bitcoins of the system.
What it means is, unlike traditional currency, Bitcoins do not need to be printed, instead they need to be mined. And this is how all new Bitcoins come in the market.
However, the protocol set by Mr. Naka Moto has two rules.
- only 21 Million Bitcoins could be mined and amongst them, 12 million have been already mined.
- The amount of rewarded Bitcoins decreases over time.
This means with the increasing amount of time the supply of Bitcoins will be decreased causing an increasing market demand.
Values Of Bitcoin :
Now, let’s see how much valuable these Crypto Currencies are!
At the beginning of 2017, 1btc was worth 1 thousand US Dollars
while at the end of 2017 1 BTC was worth 19 thousand US Dollars
The value of Bitcoins is regulated by the market demand. If people are believing in Bitcoins and wanting to transact with it, then the price or value of Bitcoin will be increased. And if people are not interested in it, then the value will be decreased.
Though there are only very few companies like Subway, Microsoft, WordPress who accept Bitcoins but the number is increasing over time.
Wrapping Up :
This Cryptocurrency Craze happened very recently. So no one knows the exact future of Cryptocurrencies. So there is a million Dollar question that
Could cryptocurrencies be the future currencies or not?
Well, we have reached here from the Barter system to paper notes and now credit cards…Then why not Crypto Currencies.