Bit coin is a crypto currency which is first introduced by a anonymous person called “Satoshi Nakamoto” in a research paper. This research paper is generally the starting point of bitcoin generation. The name Satoshi Nakamoto can be a single person or group of individuals. The inventor of bit coin is active for publicizing the bit coin technology for few years and vanished in 2012 with some share of bit coins with him. As per some stats he have 5% of total bit coins that can ever be generated. The main idea behind bitcoin is to build trusted consensus (consensus means a general agreement among network) among distributed network. The research paper basically provides to build a network where trust is main concern. This trust part makes the bit coin a very useful and secure technology. There are many applications of bitcoin other than its current functioning as a concurrency.
The bit coin cryptocurrency is based on block chain technology. The block chain technology generates this trusted consensus with the help of a distributed ledger. The distributed ledger in laymen terms is a certificate kind of thing which is shared with each and every one in the network. If some one tries to change the information present in the ledger by changing information present in the distributed ledger that he have, then other people in the network will detect the change because the information is present with them too. The trusted consensus is generated based on majority and minority basis. If majority of people agreed to a certain transaction in the network then that transaction will be valid. So to hack the bit coin the hacker must change the information in 51% of ledgers present in the world. This is highly impossible to do and due to this difficulty the bit coin is highly secure.
The transaction between two people is validated by a mediator called miner. To add a transaction in a ledger and distribute, it takes lot of computation power. Normal processors that ran on our PCs won’t be sufficient for mining bitcoins. For the purpose of bitcoin mining some special purpose processors are sold like ASIC processors. So the miner have to spend good amount of money to mine bit coins. Now the benefit for spending’s made by miner is, he will be given incentives in the form of bitcoins for every bitcoin he mine. In simple terms bit coins will generate from thin air into miners account when he mines a bitcoin. At present totally 16 million bitcoins are mined and maximum bit coins that can be mined are 21 million. Experts predicted that by the year 2140 the last bit coin will be mined.
For every 10 minutes block chain gets updated, means a miner validates transaction between two people in every 10 minutes and updates the block chain. So what happens after all the bitcoins are mined? To this there are methods where transaction charges will be credited to miner account if he mines after all the bit coins are mined. Really cool right? This break through technology made very huge impact in society and the way people transact with each other.
Now the drawbacks of bitcoin are it can be used for anonymous transactions and this leads to increase in crime. Some research papers revealed how a bitcoin network is prone to hacking