What is BitCoin? How Does it Work & Why it’s Going High So Crazily?

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Asif Ahmed
Asif Ahmedhttp://techtippr.com
Founder and Cheif Editor of Techtippr, Get in touch with me on Twitter or Enjoy my Stories on Instagram. I think they are interesting. :-)

That’s actually too many questions at once but we will try to answer them anyway.

If you are not living under a rock (which, obviously you arent, if you are reading this article) you might have already, read, seen and heard a lot about the Bitcoins and their amazing growth of value in the last few weeks.

Just to give you some numbers, here is the value of 1BTC since the year it was founded.

  • January 2010 – A user auctioned 10,000 BTC for just $50 (but no buyers were found)
  • March, 2010 – 1BTC = $0.003
  • March, 2011 – 1BTC = $1.00
  • December, 2011 – 1BTC = $2
  • December, 2012 – 1BTC = $13
  • April, 2013 1BTC = $266
  • November, 2013 – 1BTC = $1000
  • March, 2014 – 1BTC – $500
  • March, 2015 – 1BTC = $200
  • March, 2016 – 1BTC = $500
  • March, 2017 1BTC = $1200
  • May, 2017 – 1BTC = $2000
  • September, 2017 – 1BTC = $5000
  • November, 2017 – 1BTC = $7300
  • 5th December, 2017 – 1BTC = $12000
  • 8h December, 2017 – 1BTC = $18000

So if you notice the growth, it went crazy in December 2017 which also made me write this article.

It is being talked about a lot everywhere I go, my Facebook timeline is filled with the so-called experts telling people to invest or not invest in the BitCoins.

And the funny thing is, no one ( or the majority of them) really knows what the Bitcoin actually is, how it works and why it is going up like crazy?

While I am no expert at this new digital currency, I spend a good amount of time reading articles, and watching videos from the very start.

So What is BitCoin?

Technically it is a combination of codes that is saved in a Computer or a Smartphone. (more explaining to this can be found further in the article)

It can be considered as a hybrid of Gold or any sort of materialistic asset that has a value which is not set by a particular organization.

Whereas the Fiat Currency, or in simple terms, the currency we use, like the USD, the Indian Rupee or any other, has a value because a Government Organization has put a value on it.

Why it’s Value going so high day by day?

While I (and many others) compared it with Gold. it’s even better than that, because, unlike Gold, BitCoins can be brought into existence till a particular date.

Whereas it is uncertain how long the Gold can be mined from Earth. So there is a market Cap on Bitcoin which makes it even rare and the value will only go up in future.

There are some analysts who believe that the value will go up as high as $100,000 in next 10 Years, and, looking at the current scenario, it can reach that point pretty quickly.

One Interesting thing is that 1BTC can be break up to 10 decimals, meaning you would be able to spend even 0.0000000001 BTC, so in future, if the value ever reaches what it is estimated right now, smaller amounts still could be used for transactions.

The Benefits of using BitCoins

One of the major benefits, or perhaps the reason why it was started in the first place, is the Remittance of money.

Because it is a decentralized currency, which is not governed by any financial institution, the BitCoins can be sent to anyone in the world for a fixed amount of fee.

Unlike with the real currencies where Financial Institutions charge a percentage for the transactions and also, the International transactions take days to complete.

And you also don’t need a bank account or any sort of thing to do the transactions. You just need to download a wallet where the Bitcoins can be saved.

The other benefit of Bitcoins is a bit off in favour of the merchants, as its transactions are irreversible. Because there is no third party involved, the transactions can not be reversed once sent, the only way to get the money back is if the receiver agrees to send back.

The Cons of using the BitCoins

The last point mentioned above might as well be a con of using the Bitcoin but this reduces the frauds merchants face on a daily basis where the benefit of the doubt is mostly given to the buyers.

The Bitcoins are saved locally on your device, and if the device gets stolen or you lose it, you lose BitCoins unless you have the backup phrase, which is a string of words that identify your bitcoin address.

Each Bitcoin wallet is given a BitCoin address, and that’s the only thing needed for the transactions, there is no Name required, no address or any sort of proof that is required in a case of transactions with Fiat Currency.

And because of this nature of Bitcoin, some experts worry about its use in illegal activities.

How do more BitCoins come into existence?

As I mentioned above that it is certain how many Bitcoins can come into existence, when there is no particular body that controls or regulates it, how do more BitCoins come into existence?

This is where Miners come to the scene. When BitCoin transactions are done, they are monitored by Computers connected to the Internet, the purpose of these computers is to solve some complex mathematical problems to validate the transactions. These computer operators are called Miners. More explanation about the existence of BitCoins is here.

The more powerful the computer is, and the faster the internet is, the faster the transaction is going to be validated, and with each successful validation, the Miners get rewarded in the form of BitCoins.

But Mining Bitcoins is not that easy and it surely doesn’t make you a millionaire, if a Powerful computer works for 24 hours a day, it might take thousands of hours for earning a piece of BitCoin.

When I looked up for a clearer answer to this question, There are some analysts which take about getting one block in 98 years, One block is 25BTC, So even the most powerful computer might take a couple of hours to mine 1 Bitcoin.

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