What is Bitcoin – Everybody wants to know more about this top trending buzzword whether a common person or an interviewer.
Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or rupees, they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.
It’s the first example of a growing category of money known as cryptocurrency. Cryptocurrencies are just lines of computer code that hold monetary value. Those lines of code are created by electricity and high-performance computers.
Cryptocurrency is also known as digital currency. Either way, it is a form of digital public money that is created by painstaking mathematical computations and policed by millions of computer users called ‘miners’. Physically, there is nothing to hold.
Bitcoin uses peer-to-peer technology to operate with no central authority or banks managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source, its design is public, nobody owns or controls Bitcoin and everyone can take part. Though many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
Bitcoin can be used to buy things electronically. In that sense, it’s like conventional dollars, pounds or rupees, which are also traded digitally.However, bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.
A software developer called Satoshi Nakamoto proposed bitcoin, which was an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees.
Bitcoins can be obtained in a number of different ways. It’s possible to accept them as payment for goods or services.You can also buy them directly from individuals or special websites called ‘exchanges’ that will swap Bitcoins for regular currency.
Bitcoin accounts cannot be frozen or examined by tax men, and middleman banks are completely unnecessary for bitcoins to move. Law enforcement and bankers see bitcoins as ‘gold nuggets in the wild, wild west’, beyond the control of traditional police and financial institutions.
Bitcoin stores details of every single transaction that ever happened in the network in a huge version of a general ledger, called the blockchain. If you have a publicly used bitcoin address, anyone can tell how many bitcoins are stored at that address. They just don’t know that it’s yours.There are measures that people can take to make their activities more opaque on the bitcoin network, though, such as not using the same bitcoin addresses consistently, and not transferring lots of bitcoin to a single address.
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