August 15, 2017

What is Bitcoin ?

Back in 1998, a group of people that were subscribed to the mail list “Cypherpunk” received an idea of a new currency that wasn’t centralized to any authority central, instead of that, this currency would use cryptography to control the creation and transactions made with it. That idea was the beginning of the “cryptocurrencies” that work basically that way, being the first one of them all Bitcoin. But what is exactly Bitcoin and how it works? We’ll explain you then.

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Bitcoin: the first cryptocurrency

As we mentioned before, Bitcoin is the first cryptocurrency created. It was born on 2009 by “Satoshi Nakamoto” whose real identity is actually unknown; some people even say it’s not a person but a group of people. The fact is that with the entry of this digital asset that not only is not centralized but also works with a free code so anyone in the world with a pc and the right knowledge can check the code and even intervene or create their own version of the system.

This works because the priority of Bitcoin miners (ordinary users that work every day on the Bitcoinchainblock) is to maintain this digital asset true in order to have an exchange system that is not controlled by government entities or bank central.

Originally, there was no tangible Bitcoin money; it was solely a digital asset as we said, but the success of the system and the fact that it is the most used currency in the world, resulted in the creation of a tangible Bitcoin coin. This innovation is still quite new so the actual functioning and impact of it in the worldwide economy are still hard to predict but truth is that this Bitcoin cash entered the economy with around 400$ value. This speaks so much about the position Bitcoin has taken in the world’s market transactions.

How does Bitcoin transaction work?

As the system is decentralized, there’s no need of any intermediate as a bank or entity to make the transaction, it happens directly. This is possible because of the “Bitcoin wallets”. These are just like a bank account or digital wallet where you simply keep your bitcoins. The number of bitcoins you keep in your wallet increases or decreases according to the kind of transaction you realize (i.e: buying or selling stuff online).

The transactions then are directly from wallet to wallet working with P2P exchanges; this is, Peer to Peer or what is the same, directly between one storage wallet and the other. This way, transactions are private and non-intervened by any outside party creating a much safer trade. The fact that Bitcoin is based on miners good-will generates a little suspicious since it is possible to use Bitcoin for a criminal transaction as happened before with The Silk Road and other Deep Web issues. Nevertheless, Bitcoin and lots of other cryptocurrencies like as Ethereum are so established that can actually become the money of the future because let’s be honest, who wants banks and governments to control all our money? Anyway, the impact of this kind of transaction will be only measured with time, let’s hope for the best.