Bitcoin is a digital currency or crypto-currency which protects the value of the coin from being taxed by the government. This digital currency is used to pay for various goods and services online.
Bitcoins first appeared in 2009 from a developer supposedly named Satoshi Nakamoto.
Crypto-currencies are lines of computer codes that hold monetary value. These lines of codes are created by electricity and high-performance computers. Bitcoins are forgery-resistant. It is so computationally-intensive to create a bitcoin that it isn`t financially worth for counterfeiters to manipulate the system.
What makes bitcoins so controversial is that they hold power to make money away from the eyes of government and banks. Bitcoins can be stored in wallets. A wallet is a small personal database that you store both online or offline. Online storage can be a cloud account and are easy to get hacked. While cold storage is a person`s computer drive. The bitcoins stored in a drive can be lost if the access or password to the drive is lost.
In other words, it’s a virtual bank account. Bitcoin wallets cannot be frozen or examined by taxmen persons, which makes it free of any scrutiny from local government and law enforcement agencies.
Once you own bitcoins, they behave like physical gold coins; they possess value and trade just as if they were chunks of gold. The value of a bitcoin is self-contained. Every bitcoin records the digital address of every wallet it touches. However, it does not register the names of the individuals who own the wallets. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.
People who develop bitcoins are called ‘miners.’ Bitcoin is self-limiting because only 21 million of total bitcoins will be allowed to be created, among which 11 million is already mined and in circulation. Bitcoin mining involves commanding your home computer to work around the clock to solve problems (computationally-intensive math problems).
Each bitcoin math problem has a set of possible 64-digit solutions. Your desktop computer, if it works 24hrs continuously, might be able to solve one bitcoin problem in two to three days, sometimes longer.
There is no insurance to protect the bitcoins in a wallet. If the access to the wallet is lost, it is gone forever. Around $2 billion worth of bitcoins is lost because of the lost data.
Value of a Bitcoin changes every day. 1 bitcoin is worth USD 11,400 or Taka 9,57,600.