In November 2008, just after the global financial meltdown, the world got the first brief idea on a new digital currency. A paper was posted to a cryptography mailing list under the pseudonymous name Satoshi Nakamoto titled: “Bitcoin: A peer to peer electronic cash system“. This paper featured the basis on which Bitcoin was built on. The Bitcoin Network came into existence in January 2009 with Satoshi Nakamoto mining the first block of Bitcoin and making the first transaction. This was the first step of moving towards a global economy. There were several attempts at frictionless peer-to-peer payments before Bitcoin, but Bitcoin is the first one which worked flawlessly and had mainstream adoption making it the largest digital currency.
Bitcoin functions on Blockchain which is entirely digital and decentralized. Bitcoins are produced by people running Mining Computers which solves complex mathematical problems.
Anyone can mine Bitcoins by joining the network. It is completely transparent on how much Bitcoins are in existence. The availability of Bitcoin depends on the demand and supply and cannot be regulated by any system which is just opposite the case involved with paper currency. The Central Banks of different countries regulate the flow of its currency through different monetary policy and open market operations. The numbers of Bitcoins are limited, and only 21 Million Bitcoins can ever be mined. Also, Bitcoins can be broken into 100,000,000 pieces for ease of transactions. This smallest quantity of Bitcoin is known as ‘Satoshi’ based on the inventor of Bitcoin.
Bitcoin has a fantastic set of features which cannot be matched by conventional banking or currency. It is anonymous and completely transparent at the same time. It cannot be controlled by anyone, accessible to everyone with very minimal fees.
All Bitcoins are stored in wallets. These wallets are randomly generated and do not require any details about you. These wallets are stored in the decentralised Blockchain Ledger and knows exactly how much Bitcoin is in each wallet. This way, it is entirely transparent letting the community spot out irregularities. At the same time, it is anonymous because you have a digital key to authenticate your wallet and nothing else.
Since it is a decentralized network, it prevents devaluation of your hard earned money through inflation. Also, anyone can create a Bitcoin wallet in seconds and start receiving payments. Compare that with the traditional banking system which is still inaccessible to millions of people because of ridiculous fees and complexity in using it. Also, Bitcoin has the lowest possible charges when it comes to transactions. Imagine you are sending $100 to the US. It would cost you upwards of $20-30 just for sending the transaction and take you a few days. With Bitcoin at the time of writing this article, you can send the same $100 for less than $2 in under 15 mins.