January 26, 2018
Bitcoin is the main thing people talk about these days. People from Japan want to make bitcoin a legal tender whereas the CEO of J.P Morgan Chase Jamie Dimon calls it a fraud.
India too is not happy with bitcoin as the Reserve Bank of India official Sudahrshan Sen said it was uncomfortable with `non–fiat’ currencies like bitcoin. So bitcoin being the talk of the town these days some people may wonder what the hell is a bitcoin. This explanatory blog is for you.
WHAT IS A BITCOIN?
A bitcoin is basically a form of digital currency. No one controls it. No banks or other authorities control it. They are not printed like rupees or dollars. They are mined by people all around the world using powerful computer softwares which are used to solve complex mathematical problems. The owners of bitcoins are anonymous; instead of using a name or any other personal information bitcoin connects people through encryption keys.
WHO CREATED BITCOIN?
Bitcoin was introduced by a software developer named Satoshi Nakamoto. His main idea was to produce a currency which was transferable instantly and with a very less transaction fee. After implementing his idea on bitcoin in 2011, he transferred his domains to others in the bitcoin community and vanished.
HOW TO BUY BITCOINS?
Well, if you are ok with the risk associated with buying a bitcoin, then you can buy or exchange bitcoin from many digital currency exchanges. Coin mama, zebpay, kraken and coin base are the most well-established and largest of them all. You can sell, exchange and buy bitcoins there.
ARE BITCOINS SAFE?
For now yes, until you do not do illegal things with it, it is safe. For example, it was the only currency which was accepted in the dark web to buy illicit goods.
Bitcoin is very risky too. For example on a fine morning you may know precisely what a rupee or a dollar can buy. But that is not exactly the case with bitcoins as they are highly volatile and the value of a bitcoin may swing from day to day or may be from hour to hour. As said earlier they cannot be traced by anybody as they are anonymous. But this is bad too as you may not know who sells you the bitcoins or buys it from you.
Theft is a risk too. There are many stories of bitcoin getting stolen from individuals and from various well-established bitcoin exchanges like Nice Hash. It was reported that in early 2016 nearly $64 million had been stolen by hackers of a Slovenian-based company called Nice Hash. The hack was a highly professional attack with sophisticated social engineering. Nearly 4700 bitcoins had been stolen.
IS MINING LIMITLESS BITCOINS POSSIBLE ?
Well unfortunately, NO. The bitcoin protocol states that only 21 million of these bitcoins can ever be mined. So it is very limited (about 12 million have been mined so far) like a gold or a diamond.
DO ANY OTHER CRYPTOCURRENCIES EXIST?
Yes they do. There are many other cryptocurrencies from which you can buy. Like ripple, ethereum and litecoin.
M . Shreenivasan , a Grade 9 student of The Indian Public School, Coimbatore, is an aspiring tech enthusiast interested in everything from videogames to programming. He can be reached at [email protected].