Cryptocurrency

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it

nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized
networks based on blockchain technology a distributed ledger enforced by a disparate network of
computers. A defining feature of cryptocurrencies is that they are generally not issued by any
central authority, rendering them theoretically immune to government interference or
manipulation.
Cryptocurrencies are systems that allow for secure payments online which are denominated in
terms of virtual "tokens," which are represented by ledger entries internal to the system. "Crypto"
refers to the various encryption algorithms and cryptographic techniques that safeguard these
entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.

Today there are thousands of different types of cryptocurrencies, and while each is designed to
provide some new feature or function, most are founded on similar principles to those that
established bitcoin.

 Bitcoin was the first cryptocurrency. When Bitcoin launched in 2009, it didn’t have much or any
competition in the newly minted realm of digital currency. By 2011, though, new types of
cryptocurrencies began to emerge as competitors adopted the blockchain technology bitcoin was
built on to launch their own platforms and currencies. Suddenly the race to create more crypto
was on.

History of Bitcoin
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. The cryptocurrency was invented in 2008 by an
unknown person or group of people using the name Satoshi Nakamoto. The currency began use
in 2009 when its implementation was released as open-source software.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other
currencies, products, and services, but the real-world value of the coins is extremely
volatile. Research produced by the University of Cambridge estimated that in 2017, there were
2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
Bitcoin has been criticized for its use in illegal transactions, the large amount of electricity (and
thus carbon footprint) used by mining, price volatility, and thefts from exchanges. Some
economists and commentators have characterized it as a speculative bubble at various times.
Bitcoin has also been used as an investment, although several regulatory agencies have issued
investor alerts about bitcoin. In September 2021, El Salvador officially adopted Bitcoin as legal
tender, becoming the first and only nation in the world to do so.
The word bitcoin was defined in a white paper published on 31 October 2008. It is
a compound of the words bit and coin. As of Aug. 2021, there were over 18.8 million bitcoins in
circulation with a total market cap of around $858.9 billion, with the figure updating frequently.
Only 21 million bitcoins exist, preventing both inflation and manipulation.

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Bitcoin’s pseudonymous creator, who built its decentralized system that anyone could participate
in, but no one could own. Although it was open to all, ironically, Bitcoin transactions were
supposed to be anonymous. When Bitcoin came into being in 2009, the promise was to be the
universal electronic currency that passed around the world in minutes. However, Bitcoin has
qualities that make it not only a coin but also a store of value and a network of payments.
The exponential jump in the rate of Bitcoin has stoked interest from big banks and even Wall
Street. For example, in 2010, using the forum bitcointalk.org, a developer bought two pizzas by
paying Bitcoins for the purchase. Fast-forward a few years, and the value of that Bitcoins shot up
to 425 million dollars. They are now trading for more than $2,600/- but hardly anything to spend
it on.

What is Bitcoin?
Bitcoin, often described as a cryptocurrency, a virtual currency or a digital currency - is a type of
money that is completely virtual. It's like an online version of cash. You can use it to buy
products and services, but not many shops accept Bitcoin yet and some countries have banned it
altogether.
However, some companies are beginning to buy into its growing influence. In October last year,
for example, the online payment service, PayPal, announced that it would be allowing its
customers to buy and sell Bitcoin. But in Nepal it is still illegal to buy or use of bitcoin.

How does Bitcoin work?

Each Bitcoin is basically a computer file which is stored in a 'digital wallet' app on a smartphone
or computer. People can send Bitcoins (or part of one) to your digital wallet, and you can send
Bitcoins to other people.
Every single transaction is recorded in a public list called the blockchain. This makes it possible
to trace the history of Bitcoins to stop people from spending coins they do not own, making
copies or undo-Ing transaction.

How does people get Bitcoin?

There are three main ways people get bitcoin: -
 You can buy Bitcoins using 'real money.
 You can sell things and let people pay you with bitcoins.
 Or they can be created using a computer.

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How are new Bitcoin created?
In order for the Bitcoin system to work, people can make their computer process transactions for
everybody. The computers are made to work out incredibly difficult sums. Occasionally they are
rewarded with a Bitcoin for the owner to keep.
People set up powerful computers just to try and get Bitcoins. This is called mining. But the
sums are becoming more and more difficult to stop too many Bitcoins being generated. If you
started mining now it could be years before you got a single Bitcoin. You could end up spending
more money on electricity for your computer than the Bitcoin would be worth.

Why are Bitcoin valuable?

There are lots of things other than money which we consider valuable like gold and diamonds.
Bitcoins are valuable because people are willing to exchange them for real goods and services,
and even cash.

Why do people want Bitcoin?

Some people like the fact that Bitcoin is not controlled by the government or banks. People can
also spend their Bitcoins fairly anonymously. Although all transactions are recorded, nobody
would know which 'account number' was yours unless you told them.
In an online chat with social media users in January 2021, the world's richest man, Elon Musk,
said he was a big supporter of Bitcoin. He even went as far as to change his Twitter bio to
"#bitcoin". He has repeatedly shown his support to online currencies in recent years and caused
major movements in their values due to his own personal wealth and influence.
This particular endorsement led to the value of Bitcoin to rise significantly.

Is Bitcoin secure?
Every transaction is recorded publicly so it's very difficult to copy Bitcoins, make fake ones or
spend ones you don't own. It is possible to lose your Bitcoin wallet or delete your Bitcoins and
lose them forever. There have also been thefts from websites that let you store your Bitcoins
remotely.
The value of Bitcoins has gone up and down over the years since it was created in 2009 and
some people don't think it's safe to turn your 'real' money into Bitcoins. This concern was
expressed by the head of The Bank of England, Andrew Bailey, in October 2020.

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He said that he was "very nervous" about people using Bitcoin for payments pointing out that
investors should realize its price is extremely volatile. By this, he meant that the value could drop
significantly at any moment and investors could lose a lot of money.