By Shah Mir Aizaz
All you need to know:-
Bitcoin gambling and trading is becoming highly popular across the globe. It is a digital form of currency that is generated and stored electronically. It is not under anyone’s control and helps in solving mathematical problems. The way in which bitcoins are different from normal currencies is that, normal currency is in material forms unlike bitcoin. In addition to this, they are also decentralized. There is no organization that exists on the planet, which has a control over bitcoin generation. This tends to be soothing for a lot of people, because they do not have fear of their amount being stolen or taken over by any entity.
The creator of Bitcoins is a renowned software developer by the name Satoshi Nakamoto. It was an electronic payment method controlled by mathematical problems. The reason it came into being, was to rid the currency from all central authorities for example banks or government.
Now, you must be wondering that who prints this currency. As I mentioned before that it is an electronic based currency that is not controlled by anyone, therefore it isn’t printed by anyone. It is based on a community of people that can be joined by anyone. The term used to extract this money is known as “mining”. If we keep all these things in our mind, we will realize that there is indeed unlimited amount of bitcoins that we can buy. Satoshi, I a smaller unit of bitcoin (one hundred millionth of a bitcoin).
Unlike other currencies, bitcoin is not based on gold or silver. The fact is that it is totally reliant upon mathematics rules and laws. People across the globe, used mathematical solutions to work out the way of making bitcoins. The formula is therefore, available to the public so that they may know the trick. In addition to this, the software too, is available for public use.
There are several features of the bitcoin that makes it so renowned, easy to access for everyone. First and foremost, as mentioned before it is decentralized. Every processor involved In the making of bitcoin is completely free of any entity controlling it, and is apparently interconnected with the whole system. It cannot be over driven, over ruled etc. Even if the system remains offline for a specific period of time, the generation of bitcoins does not come to a standstill. It keeps on going with the flow.
Another very important characteristic of bitcoins is that it is extremely easy to establish and begin. Unlike other banks which require you to set up an account, bitcoin does not require any of such formalities. What you can do in this case, is set up an address for your bitcoins within a few seconds and you are good to go. Secondly, it is also anonymous. No matter how many bitcoins you have stored and generated it will always remain anonymous. However, what you must know is that, it is completely transparent. Other users can tell the bitcoins you have made, but cannot tell that it is you. This is saved in a ledger known as the Blockchain. What can be done, in order to hide you actual amount is that different addresses can be used instead of just one. Bitcoin does not even charge any additional fee on international transactions. The transactions are extremely fast, and the amount is transferred as soon as the processing time is over. But, there is no getting them back once they are sent. You can only get them back if the recipient returns them to you. Apart from this, there is no possibility of re obtaining them.
The question which now arises is, that how are the bitcoins mined? There is no person that is managing the bitcoins, however there is a system which tells that how much bitcoins is being transferred from one person to another. This is known as the block, and it is the task of the miner to keep a record of this and then store the data on the general ledger.
Blockchain as mentioned before makes up and defines the general ledger. It is basically used to find out any of the transactions that are made between the miners at any given point in time. As the new data is added, the list grows even longer and in order to ensure that the miners actually know what is happening, they are provided with a copy of this. However, what makes us sure that the general ledger can be trusted since it is after all electronic and contains vast amount of information. When this block is apparently made, the miners put it under a process. The information is taken by them that is in the block and through the application of mathematical formula, it is formulated into a totally different thing. This new thing is much concise, random and is known as hash. These hashes possess very unique features. They can be easily produced from the bitcoin data block. By looking and observing the hash it is seemingly impossible to find out the correct data information. By adding a single number extra, the properties of the hash completely changes. Apart from this, there are other factors as well that determine how the hash in the bitcoins is formed. It is like a digitized version of wax. The previous data basically leads to the formulation of the next one and turns out to be completely different and unique in every aspect. This also helps to differ fake blocks from the actual legitimate ones. If you try to deviate the block, the equation for the next hash is completely ruined and causes a problem.
Miners actually compete with each other electronically to mine blocks. By creating a complete block, the user apparently earns 25 bitcoins as a reward for this job and every person online on the network comes to know about this. This is one very dominant feature of using bitcoins and has attracted many people towards itself.
If we go through all of what has been discussed by now, mining bitcoins is not a very easy task. You possibly cannot mine too many bitcoins at a very fast pace. “Proof of work” is introduced which basically makes the mining task pretty difficult as you progress. All of the hash must not look the same. There are certain requirements that need to be met. For example, a specific number of zeros in the beginning etc. There is no possible way in which the miners can indulge with the transaction data in the block. They need to change the data application to produce a new stash and this work is known as the “nonce.” They nonce needs to perfectly fit into the algorithm in order for the new stash to be made. This is not an easy task and at times, it takes numerous attempts to perfectly configure. So, you see the way miners can earn their bitcoins.
You must be very eager to know the way you can save bitcoins. So, the thing is pretty simple and straightforward and is perfectly explained in this article. The stuff that saves this currency is known as bitcoins wallets and has private and confidential keys you need to have in order to access it. These are available in various forms and are of course, used electronically. However, the good thing is that you can also make use of paper in order to save it somewhere apart from your computer. It is increasingly important that these have a backup storage plan to prevent any losses or theft. Bitcoins can be ideally said as the currency of the modern generation. Simply speaking bitcoins are not “stored”. The key acts as a password that is used to extract them. The different types of bitcoin wallets include hardware, paper, web and mobile.
If a miner has been successful in installing the Bitcoin Core, then they are actually running a wallet of which they might be unaware of. The address acts as a gateway to sending and accessing the bitcoins. Other desktop wallets include MultiBit that can function on Windows, Linux and Mac OSX. Armory is a form of wallet that enhances the security of the bitcoins you have generated or mined. Whereas, DarkWallet desktop is used for anonymity. It is used to provide the mixing of coins as well. The advantage of this is that it prevents other people from tracking it.
What’s better then than the desktop based wallets are the mobile wallets. These are easily accessible for example you cannot carry your desktop anywhere and everywhere unlike your mobile phone. This can be used to purchase something from stores etc. The best thing about this mobile wallet is that, it can be run as an app on your phone. It may also make use of the NFC (near-field communication) that works by tapping your phone against a reader and then conduct the payment via the bitcoins. If this feature is not remarkable, then tell me what is?
However, unlike full bitcoin clients that must download the entire blockchain, mobile wallets do not have this feature, because the memory is not sufficient enough to support such a massive amount of data. In addition, you might be even charged with a huge cellular network bill if you would try to do this. To cover up for this, by the help of SVP you can download small parts of the entire bitcoins blockchain. There are various mobile bitcoin wallets for example Xapo and Mycelium. These also help keep a backup of your data on a server that is web based.
The next type of wallets are known as online wallets. These help store your bitcoins on an online database that is controlled by another entity. These are widely available and can send links to your desktop or mobile phone. The beigest positive side of the online wallets is that you can easily access them from any part of the world, provided that you have a good internet connectivity. Examples of such wallets include Coinbase, which functions worldwide. The users in Europe and the United States of America can purchase and send bitcoins through this without any difficulties whatsoever. Another example is of Circle, which also offers worldwide storage coverage to its users. However, only the American citizens are allowed to link their bank account details with this online wallet. Xapo, on the other hand is popular in serving as a simple bitcoin online wallet.
Next comes the hardware wallets. These although being limited in number provide you with the storage and also help in conducting payments of the bitcoins. One prominent example of this is the Trezor hardware wallet that provides a storage capacity of a large number of bitcoins and is very easily available for public use. There is another one that is known as Ledger USB wallet. This USB device, as the name suggests is used for storing bitcoins and is pretty cheap and widely available.
The question which arises now is that, if the bitcoin wallets safe or not? Well, the short answer is yes. However, there are certain hazards that may be caused depending upon how you basically manage the bitcoin wallets. You must always remember and save your bitcoins address. If in any case you forget this, then unfortunately you are never going to be able to access your bitcoins and may lose them forever. Now, you must be wondering if these are anonymous or not. The bad news is that, these are 100% transparent and can be tracked with ease. This difficulty has led to the establishment of some companies that try to provide anonymity to the users for their bitcoins wallets. There are alo numerous ways in which you can secure your bitcoins wallets. These are mentioned below:-
The first thing that you can do is encrypt them. You can use very strong passwords for protection. This will prevent any sort of theft of your bitcoins for example through the means of malware on your computer.
Another technique that you can use is the multi signature transactions. This feature allows numerous people and parties to gain address to the key. This is one hundred percent safe and can be easily implied with no difficulties.
Lastly what you can do to prevent online theft of your bitcoins is that you can keep it in the cold storage. This is a fancy way of saying that you can go offline. The advantage of this is that, even if you lose your mobile phone, forget the password of it or your computer is malfunctioning, nothing is going to happen to your bitcoins because you are offline.
The last thing which should now be addressed is whether the bitcoins are legal or not. So, the answer to this controversial question is pretty straightforward. It depends upon what you are using these bitcoins for. If you are a person in authority who is genuinely trying to make some easy money through fair means and does not breach any code, then for you this method is one hundred percent legal. However, as of yet a debate is still going on among law enforcing agencies to figure out whether bitcoins are legal or not.
So, now you have learnt quite a lot about bitcoins; what they are, how they work, how can they be stored, if they are reliable and whether they are legal according to law or not. In the end, what you should know is that bitcoins are not a child’s play. You need to have a very good understanding of mathematical algorithmic equations in order to master this art of making money. It is not a child’s play. Hard work, determination and will power in the beginning will eventually pay off in the end.