Change is the only constant. As much as this statement is applicable to the other aspects of human life is the same applicable to finance too. Money plays a crucial role when it comes to finance. Money acts as the basic source for a human to fulfill their needs. Money has been in vogue in different forms right from the Stone Age till the technologically advanced modern times we live in today. The earliest survivors of mankind experienced what is called commodity money where things were exchanged between people in the barter system. Metallic Money came into existence followed by Paper Money. Then it was Credit Money and Plastic Money in the form of Credit and Debit Cards. Bitcoin is the talk of the day. Let us look at what exactly these Bitcoins are and how the same works in detail to understand the concept.
What is Bitcoins?
Bitcoin is the money that is becoming popular every passing day and many business houses are moving towards using this virtual money. Also known as ‘Cryptocurrency’ in the Finance field, Bitcoin are a digital form of money made of lengthy codes in string format. Bitcoins can be generated to the requirement of individuals using various types of currencies in vogue across the globe. Since everything pertaining to Bitcoin is digital, currency conversion happens in a fast-paced manner than any other form. Bitcoins, in this sense, do not have any boundaries pertaining to countries or usage.
Created in the year 2009 by Satoshi Nakamoto, Bitcoins can be transacted between individuals and business firms in digital format. No middlemen like Banks and other types of Financial Institutions are involved during the complete process. Bitcoin process does not involve any kind of transaction fees. It does not demand the original details of the entity involved in the transactions including the name and where about.
How Bitcoins work?
You can own Bitcoins by installing what is called the Bitcoin Wallet in the Computer or Mobile you propose to use. Wallet in the Bitcoin system refers to an individual database which can be stored on one’s own computer hard drive or in the memory storage of other electronic devices.
Every time you need Bitcoins, choose the option available in the Bitcoin Wallet you have installed. A Bitcoin Address will be issued and this is equivalent to the unique Account number you have in your Bank for your account. Sharing this Bitcoin address with your acquaintances will enable you to pay them their dues or receive from them what is due to you. Every Bitcoin generated comes with a unique address making it usable only once for your own purposes.
Value of Bitcoins
The value of Bitcoins change every day and like many other financial data, separate websites are available for ascertaining the same. Value of Bitcoins on any particular day can be assessed by referring to websites like Coindesk which keep updating the same in a periodical manner. Bitcoins basically are not made of any tangible materials like metals or plastic since the same are more digital in nature.
The transaction in Bitcoin language is nothing but the value of the transfers that happen between one Bitcoin wallet and another. All authorized Bitcoin transactions get included in what is termed as the Blockchain. The Private Key, which is termed as Seed in the Bitcoin language is used in making the transactions an authentic one through the issue of unique signatures. These authorized signatures are taken as pointers to the fact that they have been spent from the respective wallet owned by the authorized user.
All Bitcoin transactions are maintained through a separate network created for the same namely Bitcoin Network. All transactions that are validated get stored in this network in an encrypted manner. This makes the spender or the owner of the Bitcoin to track the balance Bitcoins available for spending at all points of time. The cryptographic manner in which the Bitcoin transactions are maintained in the dedicated network ensure that the data in the same
Individual Bitcoin wallets can be stored in Cloud Server. A more safe way to backup is in your Computer Hard disk. Every time Bitcoins are created, a .dat file gets also gets generated capturing the relevant details related to the same. Copying and storing this .dat file in your computer ensures zero loss or mismanagement of Bitcoins on your part.
Bitcoin transactions processing methodology
Bitcoin transactions are processed through Data Ledgers termed as Blockchains. Every transaction can happen only through blockchains and is considered as authentic ones when it so happens. The blockchain created during transactions are unique to every customer making it a safe one. This uniqueness helps in the prevention of Bitcoin duplication and copying earlier Bitcoin data for reuse purpose.
While the Blockchain methodology ensures that all Bitcoin transactions are authentic in nature, it also ensures that the identity remains anonymous throughout the process. All Bitcoin transactions are visible through the Public history method. The transparency of this feature helps maintain integrity end to end since it prevents people from using Bitcoins for illegal and prohibited purposes.
Whether You Should Invest in Bitcoin?
Since Bitcoins is a cryptocurrency and the more stable the currencies is the better it is.However it is not the case with BITCOINS as they are extremely volatile, Investing in any kind of cryptocurrency is purely a speculative activity since they don’t give any interest or Income unlike Fixed deposits as we only expect that in future it will trade at a higher value and we will sell at high price.Since there is no Inherent value of cryptocurrencies except as a medium of exchange.The Current Rush on BITCOIN remind A lesson about markets: “I will buy your monkeys” and these type of mistakes happens again and again as greed makes us blind on Rationality front.