Bitcoins And Blockchain

Bitcoin is a type of Cryptocurrency that came into action in 2009. It is an Internet-based medium of transaction that does not occur in a physical form such as bank notes and coins. Unlike a bank, while performing transactions in bitcoin there are no restrictions and your account information is kept anonymous. To sell, purchase, transfer or create, there is no authorized organization that controls or inspect it’s working, it is a peer to peer exchange.

Bitcoins operate on a technology called Blockchain. A cryptocurrency cannot prevail without the Blockchain. It is a distributed ledger and a record will be considered valid only if it exists in at least 51% of the cryptocurrency ledgers. It works on the majority rule and instead of giving control to a central authority, it relies on networking trust.

Blockchain provides you with 2 kinds of keys, a private key, and a public key. If you lose your private key, there is no method by which you can get to your account in any way. A lot of people have lost thousands of dollars due to this. In a blockchain, data is stored in a chain form and in every 10 minutes, a new page is added to the blockchain. Adding a new page means creating or mining bitcoin.

Mining of bitcoin requires a huge computing power that is the reason bitcoin is much more expensive to run than a bank. Bitcoins are generated by anyone with a Bitcoin mining application. A certain amount of work is required for each block to be mined. The total amount of bitcoins is limited to21 million. To create a bitcoin you need to solve a mathematical problem. When you add a block in the blockchain new bitcoins are created and given to the person who created it.

Ethereum is an application of Blockchain used for contracts. Instead of using the paper contract, people started signing the contract on the program using ethereum language. The program will be executed only when the money defined in the contract is delivered.This information is stored in the blockchain. These contracts are known as smart contracts because these execute themselves once the transaction is made. When a new contract or block is added, you are rewarded with a cryptocurrency called ether.

Although bitcoins transaction relieves people from lengthy procedures and restrictions, bitcoins are used for many illegal trades such as the supply of guns, weapons or drugs. And this information is not accessible by the government or any other legal authorities as this is a decentralized form of transaction. In India, the transaction in bitcoin is illegal to avoid this kind of fraud and black money transactions.

ICO stands for Initial Coin Offering. It is a new method in which cryptocurrency is being applied. In this, a company creates its own virtual currency or coin and instead of selling shares directly in the share market the profits are promised against that virtual currency with certain obligations. By selling that coin you can get capital to build your business, and create a blockchain. In this form, only the owner can issue new coins and can allot coins according to his own rules.