introduction to bitcoins and cryptocurrency

Introduction to

By :Utkarsh Gupta14115131 (E8)

&

What is Cryptocurrency ?• Digital currency or digital money is an Internet-based medium of

exchange distinct from physical (such as banknotes and coins) that exhibits properties similar to physical currencies, but allows for instantaneous transactions and borderless transfer-of-ownership.• Cryptocurrency - A digital currency in which encryption techniques

(cryptography) are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.• The first cryptocurrency to be created was Bitcoin back in 2009.

Today there are hundreds of other cryptocurrencies, often referred to as Altcoins.

• First ‘decentralized’ digital currency. They are digital coins you can send through the internet.• No one controls it. Bitcoins aren’t printed, like rupee or dollars – they’re

produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.• An anonymous software developer called Satoshi Nakamoto proposed

bitcoin in 2009, which was an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees.• In simple words, bitcoin is an open source software to transfer money

over the internet.

Decentralized

Currently, we use FIAT Money. Trust the banks and central authorities with our money. They have complete control over it as to what amount of money needs to be printed and circulated. These central authorities are the regulating bodies to whom we have given complete control of our money ! Bitcoin is the idea that we can take back power and control of our own money and we can transact in a better way. It provides us with a currency and a payment network that we can control ourselves and we don’t have to rely on any single entity to create or help us to transact.

Characteristics It's decentralized

It's easy to set up – set up a bitcoin wallet and you are good to go !

It's anonymous

It's completely transparent - stored in public ledger known as blockchain

Transaction fees are miniscule

It’s fast

Who prints it ? No one. This currency isn’t physically printed in the shadows by any bank. Instead, bitcoin is created digitally, by a community of people that anyone can join. They are ‘mined’, using computing power in a distributed network. And those who do this job are known as ‘miners’. Bitcoin is based on mathematics. Around the world, people are using software programs that follow a mathematical formula to produce bitcoins. The mathematical formula is freely available, so that anyone can check it. The software is also open source, meaning that anyone can look at it to make sure that it does what it is supposed to. The bitcoin protocol – the rules that make bitcoin work – say that only 21 million bitcoins can ever be created by miners. However, these coins can be divided into smaller parts (the smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi’).

Why should you use bitcoins ? Bitcoins are transferred directly from person to person via the net without going through a bank or clearinghouse.

It’s fast It’s cheap People can’t steal your payment information from merchants It isn’t inflationary It’s as private as you want it to be You don’t need to trust anyone else You own it You can create your own money – simply mine it ! Secured by collective compute power of miners. Very difficult to make changes but easy to verify. Currency of the future.

Bitcoin is legal

Venture Capital Investment

What others think about ?“[Virtual Currencies] may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.”

Ben Bernake, Chairman of the Federal Reserve USA

“Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has an enormous value.”

Eric Schmidt, Former CEO of Google

“I do think Bitcoin is the first [encrypted money] that has the potential to do something like change the world.”

Peter Thiel, Co-Founder of Paypal

“Bitcoin is a technological tour de force.”Bill Gates, Microsoft Co-Founder

“Every informed person needs to know about Bitcoin because it might be one of the world’s most important developments.”

Leon Louw, Nobel Peace prize nominee