What is BITCOIN and why I am loving it?
Bitcoin is the cryptocurrency par excellence
Bitcoin is the world’s first digital currency (also known as Cryptocurrency) that took the whole world by storm and emerged as the most successful decentralized payment method. With its groundbreaking aspects and state-of-the-art technology, Bitcoin has completely revolutionized the FinTech industry. Being the world’s first Peer-to-Peer currency, it has changed the traditional approach of making online transactions. Perhaps, the greatest benefit of using Bitcoin is that it is decentralized which means there is no central system or intermediary that controls the flow of this cryptocurrency.
The Bitcoin network is run by its peers and there is no involvement of any third party which makes it as private as it could ever be. All the transactions in Bitcoin are recorded on a publically shared cryptographic ledger called Blockchain.
As a matter of fact, Blockchain provides the requisite fuel to power the Bitcoin network. Apart from the transactional data, Blockchain also stores account details and public keys of all the Bitcoin token holders. This information is secure by the most advanced form of Cryptography.
At its core, Blockchain is a series of blocks that are cryptographically chained to form an extensive database. Each block has a specified size limit and each block stores a small patch of data. Also, Blockchain creates a permanent and tamper-proof record of the stored information. The data once stored on Blockchain can’t be deleted or altered at any point of time. It remains there permanently as a digital record.
Another enthralling aspect of Blockchain is that it offers a high degree of transparency to the network without jeopardizing with the user privacy. Every Bitcoin user holds a permanent copy of the ledger and so he/she can see all the transactions happening on Blockchain. In this way, if there happens to be a fraudulent activity or malicious attempt to fool the network, it would be visible to all the nodes. So early steps can be taken to avert the risk. Of course, there is some level of anonymity as the actual identity of the user is not revealed. Instead, what you see is an alphanumeric code which indeed is the public key of the Bitcoin user who has just made a transaction.
As peculiar as it sounds, the invention of Bitcoin itself is a mystery as there is no concrete evidence about the actual inventor of this so called Cryptocurrency. The concept of Bitcoin was brought to light by a mysterious figure named Satoshi Nakamoto who published a paper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008, describing the concept of Bitcoin for the first time. He is also the first one to devise the first public blockchain, thereby putting an end to the double spending hazards in Bitcoin.
Later in January 2009, Nakamoto released the first Bitcoin software client called Bitcoin Core along with several units of Bitcoin. The latter is still the most popular desktop client and server utility software that enables online Bitcoin payments. It is believed that Satoshi Nakamoto was active until September 2010 after which he mysteriously disappeared after handling the original Bitcoin source-code and network access key to Gavin Andresen who happens to be the lead developer at Bitcoin Core. Since that day, no one has heard from him or seen him.
As of today, Satoshi Nakamoto owns a whopping sum of $2.7 billion worth of Bitcoins.
How To Buy Bitcoin?
Bitcoin has turned out to be the most successful decentralized payment method and is being used by millions of users every day. Of course, if you are new to the Cryptocurrency space, you can get started by purchasing your first Bitcoin. There are numerous ways you could do that.
First off, there are these Online Bitcoin Exchanges that give you the easiest way to convert your fiat currency into BTC. A Bitcoin exchange is a website that allows you to buy and sell Bitcoins directly. You can also post trade ads on these sites and wait for the best deal. It is by far the most popular and the most widely used exchange method as of now. Then there are Bitcoin ATMs being used as an offline medium for buying and selling Bitcoins. However, they are not as popular as the Online Bitcoin Exchanges due to lack of availability. If you are a speculator you might also consider bitcoin CFD trading or copy trading via online platform such as eToro.
There’s no doubt that Bitcoin has a bright future as a Cryptocurrency. Of course, many new coins have emerged since the inception of Bitcoin but there’s hardly any that can supersede Bitcoin, not even in a long run. Also, the price of Bitcoin seems to be on a perpetual journey with no signs of depreciation.
Many countries have come up to support Bitcoin. Japan and Russia have already legitimized the use of Bitcoin in their country while many countries are about to do that in the near future. However, there are also certain future challenges to overcome.
Bitcoin as of today has a gigantic user base and new users are connecting every other day. As a result, the blockchain is flooded with impending transactions. A rough estimation is that Bitcoin today has more than 10 million daily active users and hundreds of transactions take place every minute. To make things worse, the block size limit of 1 MB is insufficient to deal with the increased number of transactions which causes an unexpected delay. This scalability issue in Bitcoin has not only imposed an additional burden on miners but has also led to a sharp incline in the Bitcoin transaction fee.
Many solutions have been proposed to overcome the scalability issues persisting in the Bitcoin network but none has been implemented so far. The first Bitcoin Improvement Proposal was BIP 100 which was a hard fork solution and would make the block size adjustable whenever needed. Another one came in form of BIP 101 which suggested a one time increase in the block size taking it from 1 Mb to 8 Mb. The reason why they weren’t implemented is that they were both the hard fork solutions and they would make all the previous Bitcoin versions incompatible.
Then came the Segregated Witness or SegWit which received the maximum heat and it gained support from more than half the Bitcoin community. Instead of increasing the block size, SegWit aimed at fixing the transaction malleability issues persisting in the Bitcoin network which could ultimately fix the scalability problem as well. But even SegWit got rejected as it required 95% of the mining hash rate and it couldn’t get approval from enough miners.
Finally, SegWit 2x has arrived which is the combination of SegWit and a 2 MB hard fork. SegWit 2x required 80% of the mining hash rate which has been almost reached and it is very likely to be implemented soon.
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