It is of common knowledge that blockchain is considered as the technological revolution of this age. From that perspective, one cannot disregard the role that Bitcoin had to play since it is the crypto that started it all. Although the ideation of blockchain technology happened as early as 1991, Bitcoin will remain to be the first successful implementation of the technology that initiated the blockchain innovation. In this article, we will discuss the ways in which Bitcoin works.
How can one buy Bitcoin
Bitcoin is both a digital currency as well as a payment network such as PayPal. It is a global currency that is traded peer to peer without the need or existence of a central bank or authority.
To buy a Bitcoin first one has to install a virtual wallet on a computer or mobile. The wallet is much similar to that of personal finance software. It keeps a track of the Bitcoin balance as well as all the transactions that take place.
The real monetary balance should be deposited via an online payment company. Or else one can get it transferred from a traditional bank account into an account on a website. The website in question has to connect Bitcoin buyers and sellers.
After the funds are made available to the buyers they can place the order for Bitcoin that is similar to the trading stocks via an exchange like the Bitstamp. You can also buy Bitcoins from the third party for example Bitinstant. That sends the crypto to the wallet.
There is a total number of 21 million Bitcoins in existence and no one cannot create more. Since the number is limited, the value of Bitcoin keeps fluctuating as for a currency to maintain its value it is important that the supply is finite.
One of the drawbacks of Bitcoin is that it has fungibility issues. This is due to the traceability feature. When a Bitcoin transaction takes place the trading can be traced from one wallet to another, even to the date that it was mined first. If one uses the coin for unfavorable services that becomes an open thing in the blockchain. Such a thing can tarnish the history of the crypto making it less valuable than the others.
Though there are issues with Bitcoin, there is active trading happening globally by peers who think it to be a viable investment.