BitcoinBitcoin(s) is a pure virtual/digital currency, which is not backed by any physical good or commodity. It’s becoming popular nowadays; many businesses are doing bitcoin transactions. It is being used to do “fast payment”, it means that the time of exchange among currency and the product/service is short. It is not centralized by any particular institution, and no authority is regulating the process of transactions neither are guaranteeing the payment system. Bitcoins are being created by a computer mining process. The program is set up and then let it run, and then you can start collecting Bitcoins. It is an easy way and it is free of cost, anyone is at liberty to install the mining software and start mining their own Bitcoins. The system is being set up so that no more than 21 million Bitcoins will be generated. On the other hand, one can also buy or sell Bitcoins from other consumers anonymously through peer to peer file sharing software, because they have no particular serial number and are untraceable. Like other fiat currencies bitcoins have their own unit to describe currency, they are measured in ‘BTC or XBT’ subdivided into 100 million smaller units known as ‘Satoshis’ HOW DOES IT WORK?
The users of Bitcoins have an E-wallet, which provides them an E-address and identity. They user could act as both buyer/seller (pointing payments to a specific wallet’s E-address).Each E-wallet is assigned a private/public key pair. This E-wallet, and the public/private key integrated in the E-wallet, provides the client the facility to give payment instructions. Each user engaged in a public/private key scheme has two keys related with them. Using an algorithm, these two keys can be used to cipher and decipher messages. The algorithm program makes sure that the message enciphered with the public key can only be deciphered or unscrambled with the private key. It is impossible to cipher and decipher a message with the identical key. Moreover, the kind of one key...
Please join StudyMode to read the full document