Bitcoin with Brahmi 😎
Bitcoin (₿) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
I know this is how you felt. So let me explain it in simpler terms.
Let’s understand the term “Cryptography” first.
Cryptography is converting plain text into unintelligible text(Something that can’t be understood) and vice-versa.
It is a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it.
So only the sender and receiver know what they are talking about.
Now let’s understand what is Cryptocurrency.
Cryptocurrency is nothing but a digital form of cash. Today if you have to transfer money from India to the US, you need an intermediary bank to convert your money from INR to USD.
Now think of a digital currency, which doesn’t have any boundaries and doesn’t need any such intermediary bank. This is cryptocurrency: Bitcoin, Ethereum, Dogecoin, etc. Cryptocurrency is trustless, you are not bound to trust one particular entity aka the government.
Hence cryptocurrency has the power to revolutionize the finance system. Cryptocurrency will change the way we have perceived money all these years. Cryptocurrency is…
But the major disadvantage is that the transactions are irreversible since there is no central repository to maintain the identities to reverse the transaction in case of a mistake.
What is a Blockchain?
Block + Chain.
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What is a block?
Block is a database, that stores information.
Say A is transferring cryptocurrency to B. The database contains information about A, B, timestamps of the transactions, etc. Similarly several other transactions. Once the block is full, the new information is now saved in a new block. The ending of the block is connected to the starting of the next block.
All these blocks together form the blockchain.
What is a Bitcoin?
Bitcoin is a type of cryptocurrency. It is launched by Satoshi Nakamoto — Unknown Identity.
Why Unknown? Similar to how the share value of a company gets affected due to the founder's actions, the bitcoin value has no such danger.
How does a bitcoin transaction work?
The supply of INR is unlimited. Whenever the government decides the amount can be printed.
The supply of Bitcoin is limited. There are only 21 Million Bitcoins in this world, with 18.6 Million bitcoins in circulation.
Say A(in India) transfers Bitcoin to B(in the US). This transaction has to be verified now by someone since we don’t have an intermediary bank now. This transaction will be verified by 1000s of people all over the world. These people are called Miners.
Verification of these transactions requires high computations, and as a reward, some Bitcoins are mined by the miners.
This is all for now, now walk with confidence in front of people who talk about bitcoin and blockchain
Thanks, Madhavan Malolan & G.V. Karthik for helping me write this article.
Learn more about blockchain at Questbook.
