Bitcoins – The New Way to go Digital with Your Payments

Bitcoins – The New Way to go Digital with Your Payments

Image credits – Flickr

A bitcoin is a digital currency which functions independently without a central authority like a bank. It is open-source and uses encryption techniques to monitor the exchange of funds. Registered under the name of Satoshi Nakamoto, this revolutionary payment method was invented by an unknown programmer or a group of programmers.

An increasing number of merchants today are accepting bitcoin payments. You can purchase bitcoins through certain agencies in exchange of currency. As bitcoins are sent between users directly, it incurs minimal transaction fees. Bitcoin wallets are accessible from anywhere in the world and place no limitations on your purchase.

Bitcoin Basics

  1. To get started with bitcoins, you can acquire this digital asset from currency exchanges on the internet in return of money.
  2. These coins are then stored in wallets that hold the digital information required for bitcoin transactions. Several types of wallets are available and you can choose one that suits your needs.
  3. Bitcoins are exchanged from person to person over the internet and need no intermediary to complete transactions.
  4. In order to spend a bitcoin a user needs to use his private key to digitally sign the transaction. The bitcoin network uses a public key to verify the same. This eliminates any chances of fraudulent exchange of bitcoins.
  5. A public ledger called Blockchain keeps an account of bitcoin exchange. A network of interlinked nodes within the bitcoin software maintains the blockchain. These nodes confirm payments, add them to a ledger and publish this ledger. All bitcoin transfers are stored publicly which allows anyone on the network to view the transaction history behind a particular bitcoin address. The identity of the address holder is however not revealed, thereby making it a transparent yet dependable mode of payment.
  6. The Bitcoin system, just like the internet is not owned by any person or company which allows for greater participation by individuals interested in this mode of electronic payment.
  7. Bitcoin transactions are made more reliable by bitcoin miners. These miners work to ensure that bitcoin payments are secure by constantly checking and collecting the history of recently published transactions into something called a block. Each block is connected to the other by a cryptographic hash which aids in creating a network of blockchains that are linked to one another.
  8. Bitcoin miners are rewarded with newly created bitcoins as well as transaction fees.
    Regular updates and increased security features are making bitcoins the new currency to watch out for!

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