Know the Bizarre facts about Digital Cryptocurrency and Bitcoin

Cryptocurrency  is a type of digital currency that uses cryptography for anti counterfeiting and security measures, it is an exchange medium to secure transactions and control the creation of new units. In order to transfer cryptocurrency between individuals public and private keys are used. Cryptocurrency is officially designed to bring back the decentralized currency of people taking centralized banks out of equation . Cryptocurrency is essentially a flat currency i.e user must reach a consensus of cryptocurrency value and shall then use it as exchange medium. Since its not restricted to a particular country its value is not controlled by central bank.

What is Digital Currency ?

Digital currency is electronically created and stored and is distinct from physical currency (banknotes and coins). Similar to physical currency these can be used to avail services from online game stores and social network. Its a digital token that relies on cryptography for chaining digital signatures of token transfers, decentralization and peer to peer networking. Usually a proof of work scheme is used to create and manage this currency.

How it is Different ?

Transfer of money using services such as PayPal uses digital cryptocurrency and funds are transferred electronically but the money transferred is representative money and what gets transferred is underlying flat currency. It is much similar to conventional dollars, yen and euros. The most distinct aspect or feature that makes it different from physical currency is that its decentralized as no single institution controls or monitors its existence.

These are new breeds of monetary system and are handled by a sophisticated level of algorithms that is virtually impossible to track or hack.

These are created by community of people that can be joined by anyone. In order to mine a digital currency what is required is a computer network that solves complex mathematical algorithms and then distributes the digital currency for correct answers.

In centralized banking and economic systems like Federal Reserve system government controls the currency value but government does not produce the units of cryptocurrency and does not provide banking for firms and corporate entities . The underlying technical system on which these are based was initiated or created by Satoshi Nakamoto.

There are many different types of digital currencies namely Bitcoin, Dogecoin and Litecoin etc. These are held electronically via wallets which no one can manipulate.

The first digital currency ever created on cryptography was Bitcoin.

Introduction to Bitcoin

Bitcoin was the first cryptocurrency that was created in 2009. Since that year a lot of currencies have been created. With bitcoins the value is determined by the market supply and demand. Each time they are transferred , each bitcoin user has both public and private keys attached. Bitcoin is the well known and most widely used cryptocurrency.

Before you can get bitcoins you need a wallet. A bitcoin wallet is a digital wallet that stores the balance and allows you to make transactions online or offline with users. Wallets can communicate with each other similar to emails that makes it flexible to send and receive bitcoins regardless of type of wallet they have.

Ways to get bitcoins -

1.     Purchase from a Bitcoin exchange

2.     Exchange of bitcoins

3.    Bitcoins from competitive mining

4.    As payment for good and services

Maintaining the block chain is mining. Mining is usually rewarded with newly created bitcoins and transaction fees .  Mining can be done irrespective of physical location and payment is verified after each transaction and is added to block chain. As of 2014, now the payment processing is rewarded with newly created 25 bitcoins per block added to block chain.  To claim the record a special transaction is included with payment that is coinbase.

Bitcoins can be purchased from a Bitcoin ATM in exchange of cash. Bitcoin buy and sell bids are offered by participants in online exchange. Since bitcoin transactions are irreversible bitcoin sellers must take extra security measures to ensure successful receipt of funds from the buyer.

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