We use money for our day to day transactions. Every country has its own currencies which are managed by their central banks. When the printing and supply of the money notes is increase by the central bank, the unit value of the currency is reduced comparatively. This can be also called as inflation. And also it’s not an easy task to transfer money from one country to another country. In this case, sometimes you’ll have to wait for a bit longer time and also sometimes you’ll have to pay a commission.
Therefore, with the need of a solution for these problems, a person known as Satoshi Nokomoto has published a research paper in 2008 with regards to an electronic cash system which can be used by anybody in general. As this was an electronic cash system, there are no money notes or coins in this system. It only has digital records. Therefore, with these digital records you can transfer money from one country to another very fast and very conveniently by a simple method just like an email. It doesn’t charge any commission as well. Isn’t it awesome?
Other than that, this electronic cash system cannot be managed by a single organization such as a central bank. It is completely controlled by a digital algorithm software system. If you’re excited to start using bitcoins you first need to go to a bitcoin exchange and create a bitcoin wallet. There you’ll receive a unique ID for yourself. Then you’ll be able to buy bitcoins send bitcoins to another person, and also receive bitcoins from another person. Anyhow bitcoins are not real. It’s a digital record just like a file in your computer.
In this case you might be wondering why can’t anybody just copy paste them and double triple the amount of money they already have? And also there’s a problem that they can even buy things buy these doubled amount of bitcoins. This is known as the double spending problem in cryptocurrency. If someone can do it, then the whole system becomes a failure. So the person called Satoshi Nokomoto is the first ever person to come up with a solution for this double spending problem in cryptocurrency
Plus, the most interesting part is that nobody knows who this Satoshi Nokomoto is yet? Or where is this person from? Simply Satoshi Nokomoto is just a built up name. Some have predicted that Satoshi Nokomoto isn’t a single person, but it can be an organization.
In the recent years, the value of bitcoins has raised rapidly. With this matter, this Satoshi Nokomoto could become the 44th richest businessman in the planet. Enough about him.
So what is the solution for this double spending problem in cryptocurrency? The solution is a Decentralized Ledger. With this Decentralized Ledger, any bitcoin transaction happening in the world is recorded in it. But if somebody could access this Decentralized Ledger and change the data recorded in it, this system could be broken down easily. Due to this reason, this Decentralized Ledger is encrypted using cryptography. Now this is the very reason that we call this currency system as cryptocurrency. But also if somebody could break into this encrypted system and change the data, that person could be able to cheat to the system and fail the whole process.
As the solution for this very problem the Decentralized Ledger has been built. After the encryption of this Ledger, this is copied in to millions of computers around the world. Therefore, if somebody needs to hack it, he wouldn’t succeed by hacking only one computer, but he’d have to hack the millions of computers where it is copied in. So you see how protected this ledger is, where all the bitcoin transactions are recorded in, throughout the world.
But the security system of it is even wider than that. This bitcoin system has been divided into some parts. One of such parts is called as a Block. After some specific time period, another block can be built for it. And the hash code of the previous block is calculated and stored into the newly built block.
Are you confused what this hash code is? Well, the hash code is a mathematical calculation, where we can build a small number by using a bigger number, but we cannot predict what the bigger number was by just looking at the smaller number.
For example, if you get the sum of all the numbers of your birthday, you can get a single number at the end. 12.05.1992= 1+2+5+1+9+9+2= 2+9= 1+1= 2.
By looking at this single integer, nobody can ever predict what your birthday is. Likewise, if somebody changes the hash code of a block, the hash code stored in the new block wouldn’t match with the previous. In this case, it’s easy for the system to identify if somebody has changed the hash code. This assures the protection of this bitcoin ledger.
Because, every block is linked by using this type of hash codes, we call this a block chain. Therefore, to manage a block chain like this, millions of computers that are connected to the internet are needed.
Plus, to calculate the hash codes and to run the encryption algorithms, a huge processing power is needed. So who is responsible of these computers? Simply, anybody that has a computer with internet access can install the necessary softwares and participate for the maintenance of this block chain.
What’s the advantage of participating in this block chain? If you contribute to maintain the block chain of bitcoins, using the processing power and internet accessibility of your computer, you’ll receive new bitcoins by this bitcoin algorithm. So now you can realize why these contributors to the bitcoin block chain are called as “bitcoin miners”. But there is a maximum limit of bitcoins that a person can own. That is 21 millions of bitcoins. The money that we use in general can be printed by the central banks of the countries. And due to the continuous printing of money notes, the unit value of a currency is decreased gradually. This is also called as inflation. Because the bitcoins do not increase rapidly like that, the unit value of bitcoins increase day by day.
At the beginning of this system, the block chain of bitcoins was very simple. And there were no many bitcoin miners as today. Therefore, you could earn a considerable amount of money by using your internet accessibility and processing power of your computers. But with time, the complexity of the bitcoin block chain increased. And the number of bitcoin miners increased as well. With the increase of competition, a higher processing power of your computer CPU was needed to earn a considerable amount of money. Later on you could contribute GPU power too in addition to the CPU power in the process of bitcoin mining. Normally in a high end GPU, there are about 1000s of processing codes. But those bitcoin miners who used this GPU power could successfully earn a lot of money.
But with the increased complexity of the block chain, the competition between the bitcoin miners increased. And they had to connect more GPUs into their computers in order to increase their processing power. In this case, the high amount of GPUs can be easily heated.
A lot of current was needed for the cooling process of the GPUs as well. So to pay their electricity bills, the income they gained by the bitcoin mining was not enough.
The solution for this problem was ASIC. What is ASIC? ASIC is the abbreviation used to the name Application Specific Integrated Circuit. This was a small computer which was specifically designed for bitcoin mining. A SIC could run the encryption algorithms, and the calculation of hash codes really fast. And also a very small electricity was needed to process this computer. Therefore, bitcoin miners could earn back their high incomes with the use of these ASIC computers. But according to the current situation of bitcoin mining, you’ll need a few ASIC computers to earn a considerable amount. And also to cut off the expenses, you can fix a solar panel kit on your roof to generate the electricity for free. Management of the bitcoin block chain has become the top most activity in the world which needs the highest processing power and the highest electricity requirements. The amount of electricity needed for this process is higher than the cumulative daily usage of electricity in some countries.
Sometimes you may have seen news that bitcoin systems are hacked. In these cases, mostly only one person’s bitcoin wallet or a single bitcoin exchange have been hacked but not the entire system. Up to today, nobody could ever hack the bitcoin block chain throughout the world. Because of the high security it has, nobody will ever be able to hack the bitcoin block chain either. So now you might have some idea how easy and safe is it to transfer money through bitcoin. Due to this very reason, now-a-days a big demand has been created on this bitcoin system. Today the value of one bitcoin is recorded as $12,000. And it won’t stop by that. This value will increase higher and higher with the time.
And also the most important fact is that bitcoin is not the only cryptocurrency in the world. There are many types of cryptocurrencies such as,
• bitcoin cash
The block chain technology of Ethereum is far ahead than bitcoin’s block chain technology. If you need to start using a cryptocurrency such as bitcoin, you need to go to a cryptocurrency exchange and create a wallet and buy some cryptocurrency. By this time, the process of earning an income through cryptocurrency has become difficult. In 2021, there are few ways identified as easy to make money from bitcoin. They are mining, buying and holding, trading, taking advantage of affiliate marketing, accepting bitcoin as payment, using bitcoin faucets, getting tipped in bitcoin, microjobs and pay to click websites, writing about bitcoin, bitcoin talk forum campaigns, lending bitcoin, gambling bitcoin, binary trading, being a masternode, bug bounties, etc.