How Bitcoin works and why is it so popular
can you imagine a thing the value of which was zero around thirteen years back and today it’s value has touched around 11,836,613.66 PKR.
Bitcoin: i’m talking about bitcoin, that has recently touched its all time high price point, Merely 15 years ago, on 31st October, 2008, a person named Satoshi Nakamoto published a paper on the internet Satoshi’s main motive was clearly evident from the first line of the paper.
A version of electronic cash that would allow payments tobe sent directly from one party to another party without going through a financial institution.
Cryptocurrency is a digital asset over which central banks or financial institutions have no control or regulation. but there is no central bank or any main financial institution that controls the bitcoins\cryptocurrencies back then, at that time cryptocurrency was merely an idea in the mind of that person. but now, there is trading worth lakhs and corers on its crypto exchanges just like shares are traded on the normal stock markets.
In order to understand the paper of Satoshi and the context of crypto currency, we will have to understand some concepts of our economic history, our financial institues are based on trust. The currency notes and coins have value in our society becasue they are guaranteed by the government and the central bank.
Bitcoin was the first to arrive. And then many other crypto currencies surfaced- Ethereum, litecoin and ripple, In fact, in the beginning of the year, more than 2000 cryptocurrencies were available on the internet.
Let us move on the main point now: How does crypto-technology work?
In order to understand this, one needs to have knowledge of advanced mathematics and computer science, but if you want to start investment or trading, then basic knowledge would have, lets take a example of bitcoin, There is one public account in digital form, of all the bitcoin transactions this is called a ledger a copy of this ledger exists on all the systems that are a part of the bitcoin network those who run the system that is called miners, The job of the miners is to verify transactions, let suppose (A) has to transfer 2 bitcoins to (B’s) account, miners will have to confirm whether A actually does have 2 bitcoins in his account or not,
You might have studied about variables back in school. Every bitcoin transcation has a unique variable, it is not mean they take pen and papers and write down to solve eqiuations, All these calculations are carried out on the computers automatically because they are extremely complicated and their combinations run in crores.
There is a technical challenge here that makes it difficult to use bitcoins as a medium of in daily transactions, The bitcoin transactions on the block chain take time to get confirmed. One block process takes arround 10 minutes for the computer to calculate.
Overall, this is good news for all of us. We can freely invest in cryptocurrencies, if we wish to invest, We have this opportunity to diversify our financial investment, you could invest some amount of money in cryptocurrency as an experiment.
Note: Do not trade by taking loans from banks or others.