CCX002 - Bitcoin 101 - What, Why and How of Bitcoin.

CryptochainX

What is Bitcoin?
Bitcoin is the world’s first digital money, that operates without a central governing authority or issuing body.

Who created Bitcoin?
Bitcoin was created in 2007 by an unknown person or group of people, and go by the name of "Satoshi Nakamoto".

Why do you need Bitcoin?
Bitcoin has the following benefits:

Bitcoin transactions are permissionless and borderless since there is no central issuing body. The bitcoin client or software can be installed by anyone.
It's pseudonymous, no id is required to use bitcoin. It's the best solution for the individuals who don’t have a bank account or live in countries with underdeveloped financial infrastructure.
Bitcoin is censorship proof, no one can freeze or block any amount or reverse the amount once the transaction is complete, making it irreversible.
Bitcoin is online and is available 24/7 and 365 days a year on devices with internet access.
Store of value, only 21 million bitcoins will ever exist and cannot be printed or created
How does Bitcoin work?
Bitcoin is built on a technology called Blockchain. A block is a record of transactions and is a confirmation of the transaction. The sequential order collection of these blocks together create a blockchain.

Transaction Initiated

Let’s start with the transaction between two parties, called Alice and Bob. Alice provided a service to Bob, as an exchange of value Bob sent bitcoin to Alice.

Validation

While so far this transaction between Alice and Bob sounds simple, but this transaction can knowingly or unknowingly try to cheat the system. In our present system, banks act as the central authority. Banks verify if the transaction between the two parties is valid or not to ensure that they are not spending money they don’t have and to avoid double spending.

In the case of bitcoin, double spend transactions can be prevented by providing both parties with a unique serial number, which would be tied to each Alice and Bob individually.

Alice and Bob will have two keys, one is a public key and the other is a private key. Public keys act like an account number for deposits and for sending only. To withdraw, a private key is used. This key is not shared with others and must always be kept confidential.

The transaction of bitcoin between Alice and Bob uses their public cryptographic keys that along with the transaction is shared with the network of individuals called Miners. This network uses their computational resources to verify the transaction.

Transaction Completed

Once the transaction is validated by the network of Miners. Alice will receive the bitcoin that Bob had sent her and the miners will, in turn, receive a small percentage of this transaction for their efforts and resources used for validation.

What can you do with bitcoin?
Buy & Sell products/ services

There are many sellers, offline and online that take bitcoin as a payment.

Invest & Trade

Cryptocurrencies like bitcoin are accepted by the crypto exchanges can be invested and traded through their trading platform. Bitcoin is still the most identifiable cryptocurrency followed by Ethereum, Litecoin, and Ripple.

Mining

As discussed earlier, miners are a crucial part of the cryptocurrency network, and also just like trading, mining is also a financial investment. Since the equipment required for validation of transaction need high power GPU and electricity.

Miners are than paid with bitcoin for their efforts. There are many mining pools companies setting up their mining farms that see this as a profitable opportunity.

For further details and updates on other crypto assets please visit https://cryptochainx.com/