What is Bitcoin?

 

Dubbed as the digital gold of the fintech world, Bitcoin is simply electronic cash. It is in fact an alternative to traditional currencies like USD, INR , EUR and other legal tender. At the time of creating this internet cash, only a few people were able to understand the underlying technology – permissionless decentralized  blockchain technology. 

How does Bitcoin really work?

Lets say Ken wants to pay his employee Dom 1.5 BTC and he has 4 BTC in his crypto wallet. So, Ken punches his private key to unlock his wallet. Once he is in all he needs to do is hit on send and enter Dom’s wallet address. Once Ken hits on send, the transaction first goes to a Bitcoin miner to check for accuracy. This means he needs to check if the sender’s signature matches his wallet address and the balance. If all the details match then the transaction is validated and the transaction details including timestamp, address details, transaction fee and balances are added in the blockchain’s block. 

 

 

 

Why was BTC invented? 

Does Lehman Brothers ring a bell? 2008 was the disastrous year as a global recession occurred owing to banks offering loans at ridiculously low interest rates. This oversight jeopardises the credibility level of banks and other national agencies. 

The economic depression led by an anonymous person ‘Satoshi Nakamoto’ (or group of genius developers) to engineer a peer to peer cash electronic system that will not require any intermediaries like banks to approve, reject or override any transactions. Instead of a banker, the system of updating a currency ledger was replaced by a system so secure that it is tough for anyone to get in. 

 

 What makes Bitcoin blockchain unique?

Three properties of the Bitcoin blockchain that makes it a secure and accessible asset

 

    1. Fault Tolerance: Thanks to the intricate BTC mining mechanism, the chain is truly tamper proof and immutable. 
    2. Non custodial: Unlike banks that have full control of your money, BTC on the other hand can be transferred from a non custodial crypto wallet. 
    3. Flexible: Unlike banking and stock investments, Bitcoin does not need any permission or approvals for transfers. This means if you are in one part of America today and you decide to move to another city or country, you don’t have to visit any physical bank to close your account. Bitcoin can travel with you. It’s not a glass slipper 😉

 

In recent times, new investors have gravitated towards Bitcoin as an investment and some firms have also added cryptocurrency to their options in payment. With traditional fund and wealth management firms like Grayscale, Fidelity and Blackrock entering into Bitcoin ETFs the Golden asset has truly come far.