Bitcoin is a buzz word these days. Everybody is talking about bitcoin, and it seems only a few people truly understand the concept and the technology behind it. Some people think that it’s a “get rich quick” scheme, while others have termed it a sinister hacker plan to overtake the internet. So what is bitcoin exactly?
What is Bitcoin?
Bitcoin is nothing what average people think, a ponzi scheme or an underground economic network for hackers. In reality, bitcoin has introduced a technology that has the ability to dramatically change the society for good.
Bitcoin at the basic level is digital cash. It is a decentralized economic system that transfers value over the internet. And the most important aspect of bitcoin is that it is peer-to-peer. It means no third parties are required, you can directly send money to anyone, anywhere in the world.
Developed by a person or a group of people with the pseudonym Satoshi Nakamoto in 2009, bitcoin is an open-source software. Yes, it is true that nobody knows about the real identity of the people who created bitcoin, still the technology created is open for anyone to see, criticize and correct.
How can I trust it?
You can trust it because, it is not a propriety software. It is a completely open-source project, with hundreds of professional developers working around the globe. Here it is important to understand that no single individual or entity owns the bitcoin network. It is decentralized and mutually controlled by the nodes participating in the network. A bitcoin node is a computer running bitcoin core software. Anybody can run a bitcoin node anywhere in the world and has the freedom to leave the network anytime.
This is the beauty of community powered peer-to-peer networks. These types of networks do not have a single point of failure. Just like the internet, nobody, even governments cannot stop or close the bitcoin network.
How secure is it?
Internet is not secure by default, because security was not taken into consideration during the initial design phases of the TCP/IP protocols that run the internet. Bitcoin is different from the internet in a sense that it is completely based on cryptography. Bitcoin network uses public-private encryption and digital signatures to effectively make bitcoin one of the most secure networks at the moment. Moreover, the underlying blockchain technology makes bitcoin network absolutely free from the possibility of corruption and fraud.
What is Blockchain technology?
Blockchain is the novel idea that made the bitcoin network possible. To understand blockchain, consider a register where every entry is strictly verified and kept safe forever. This is what blockchain is – an open public ledger. It is a public database, where every bitcoin transaction is recorded forever. Entries into the blockchain are added by mathematically verifying every bitcoin transaction using cryptographic methods. Bitcoin miners use powerful computers to verify transactions before adding into the open-ledger. Blockchain is designed in a way that, once added, these entries cannot be tampered with. And to make it absolutely secure, copies of this blockchain open-ledger are placed with every node on the network. If somehow a false entry is made, it is easily detected by the network and removed by making consensus within the network.
This way, blockchain technology makes it possible to keep the bitcoin network safe, secure and absolutely transparent.
Blockchain beyond bitcoin
Although, bitcoin is the first application of the blockchain technology. It is applicable in a variety of fields. It can be used in creating cryptocurrencies, decentralized applications, smart contracts, decentralized autonomous organizations (DAOs), digital identity systems, record keeping, secure and transparent banking, document verification and much much more.
Aside from providing the technology to create unstoppable applications, blockchain gives one great solution that was lacking in conventional computer technology. It enables developers to create corruption free, transparent, open and secure systems that possess great potential to bring positive change in society.