So after listening to my sixth explanation of Bitcoin in as many days, this is the conclusion I have come up with. Everybody in Crypto sphere and IT world loves to have a go at explaining Bitcoin and that most people who own and have owned bitcoins for many years don’t really know what Bitcoin really is and how does the Blockchain technology behind it really works.
So let’s have our take on the question- What is Bitcoin?
October 31, 2008, was the monumental day when a person or a group of people calling themselves Satoshi Nakamoto published the white paper which claimed to explain the process of sending and receiving funds directly monitored by number of independent and connected computers without any need of a bank or a financial institution and introduced to the world the concept of Bitcoin.
BLOCK + CHAIN = BLOCKCHAIN
Since then, Bitcoin has been called the future of money and, a fraud and a Pindi scheme and everything in the middle.
Bitcoin is an electronic currency also called ‘cryptocurrency’ that means that it exists only internet and is transferred in a cryptic form and one just need the address to transfer it to without the need for usual KYC a normal bank will require.
Next issue is how does one make sure that Georgia won’t copy that digital toy and send it to some of her friends.
So, such an electronic transfer needs to be penned down or taken account of. In a physical world, we would use a book to keep track of movements of the objects so that they can be traced.
In an electronic world, these books or ‘ledgers’ need to be kept by somebody. But what if that person makes duplicates or steals? So, instead of trusting one person let the ledger be kept by hundreds and thousands of computers who will confirm this transaction. As any kind of amendments or forgeries won’t be confirmed by another computer and all the ledgers are completely transparent and available for all to view, it eliminates various risks out of the trade.
This makes the entire system quite transparent and safe for anyone who is making such transactions. This way we can easily keep track of anything that we are sending or taking. This decentralizes the power and control over the entire system and increases the transparency. So, if I try to duplicate any of the toys that I’m sending to someone, this would not sync up with everyone else in the system and thus, any chances of fraud would be minimized. There is no involvement of any government or bank which can control its flow. This distributed responsibility to keep vigil is Blockchain.
The next question is: why will these computers do this? For their responsibility and the work done by them, they are rewarded with coins- Bitcoins.
So, this is how this dynamic system operates.