Why you should know Bitcoin
This archived article was written by: Kaina Elias
Bitcoin gained enormous media attention in 2017, compared to the years before. It is not a coincidence though. At worth less than $1,000 dollars in the beginning of last year, Bitcoin reached an all-time high of almost $20,000 dollars. What is Bitcoin though? Does it even have a future?
Bitcoin was first presented to the world in 2009, created by an anonymous user named Satoshi Nakamoto (who remains unknown to this day). Nakamoto presented his idea of a new way of doing financial transactions without the need of a centralized entity, like banks, who usually charges expensive fees and can take days to complete transactions. With Bitcoin, there is no centralized institution, no bank.
How are Bitcoin produced? Who holds it? Anyone can join the community at any time. The transactions are made by “miners” – those who mine Bitcoin – by using complex mathematical equations to validate the transactions. The technology behind it is called blockchain and much more than Bitcoin itself, it holds a huge potential if becomes mainstream in the future. Here is a quick explanation of how the blockchain technology works: two people wish to trade Bitcoin over the internet. Each of them holds a private and public key, which are essentially their addresses for their respective wallets. Only the public key can be shared with anyone since it can only be used to receive transactions, while the private key is the one used to access one’s wallet and to send whatever the wallet contains. The combination of these two keys is called digital signature and makes the security behind the transactions extremely high.
The next step lies on the distributed network. The validation of a transaction depends on several miners, those who use a powerful computing system to validate the transaction. The community is so large that considering for a transaction to be validated several miners have to analyze it before accept the transaction as valid. This makes it extremely hard for any hacker to actually steal one’s assets.
In what it is called the protocol for the blockchain, a block – containing a digital signature, timestamp and relevant information – is broadcast to all nodes in the network. These blocks are recorded after the validation process through the miners and remain virtually forever on the blockchain. One can access any transaction ever made in the blockchain at any time anywhere.
The technology may be seen complicated at first. However, this is a huge step towards a decentralized system of trades of any kind. Not just Bitcoin, but blockchain can be used for several different ways of trading assets.
Bitcoin and the cryptocurrency world are still new for the masses, but are getting more media attention every day that something new is achieved. Large companies already accept Bitcoin as a payment method and this trend seems to increase every day. Only time will tell what the future of Bitcoin the blockchain technology holds, but it depends on the community that supports this new market. As it stands, we are witnessing the beginning of a new era of how money works.