An introduction to Bitcoin

Bitcoin is the first decentralized digital currency, and as such it is a revolutionary technology invention. It changed the way we compute things and the way we operate software and computers. Bitcoin and blockchain are considered to be the next big wave of change after the internet.

Now, let's look at the following properties of Bitcoin:

• It's an international network of payments.
• It uses cryptography to control its creation and management, rather than relying on central authorities such as governments, banks, union territories, or intermediaries.
• It's not printed but is produced by people using software that solves mathematical problems.
• It is controlled and limited in supply, which arrests the hyperinflation problem. For example, whenever African countries were short of currency notes, they had to print more notes, which resulted in hyperinflation and brought the value of the currency down.
• Since the arrival of Bitcoin, the way Bitcoin programs are written means there will always be a maximum of 21 million Bitcoins available across the globe. The moment 21 million Bitcoins have been mined, the program will not generate any more new Bitcoins. Hence, Bitcoins will be limited in supply and this will arrest the problem of hyperinflation.

History of Bitcoin

Bitcoin was conceptualized by Satoshi Nakamoto in 2008. We do not know whether it is a person or a group of people. This anonymous person or group of persons still remains a mystery. What we know is that Nakamoto has claimed to be a man living in Japan born on April 15^th, 1975. However, there are a lot of theories and speculation about the identity of Nakamoto. Some people say that the identity of Nakamoto is based on a number of cryptography and computer science experts living in the US and the EU, not necessarily Japanese people. In November 2017, Nakamoto was believed to own up to roughly 1 million Bitcoins, the value of this 1 million comes to be 7.2 billion US dollars, which is a huge amount of money owned by someone who is not known to anybody in the world.

Alternative cryptocurrencies to Bitcoin

Altcoins is an alternate cryptocurrency to Bitcoin. Once Bitcoin became popular, people realized the value, robustness, and flexibility Bitcoin brought and also started liking the fact that Bitcoin appreciated in value. They simply took the source code of the Bitcoin protocol available from GitHub repositories, forked it, modified it as per their needs, and created alternative cryptocurrencies. With the increasing popularity of Bitcoin, the usage and rate of Bitcoin have skyrocketed. Leaving that aside, the next question that arises is "how do we store or possess this virtual currency securely in digital form?".

Bitcoin wallets

There are several types of wallet available, in which we can hold our Bitcoins safely. Each of these wallets has their own function and ways to operate.

The different kinds of the wallet are as follows:

• Software wallet: The software wallet is a Bitcoin application that sits on your computer's hard drive and allows you to completely control and secure your Bitcoins. Bitcoin Armory is an example of a software wallet and is supposed to be the most stable and secure wallet of all.
• Web wallet: The next type of wallet is a web wallet. Web wallets are more convenient than software wallets since they can be accessed to use your funds, Bitcoins, or assets from any device. So, you can access your web wallet on your Android or iOS device, your desktop and even on the internet.
• Cold wallet: The next type of wallet is called a cold wallet. Cold wallets are simply any kind of Bitcoin wallet that is not connected to the internet. These can be in paper form, or you can have wallets on USB drives as well.
• Brain wallet: The next type of wallet is the brain wallet. The brain wallet has its address generated by a computer program by hashing the passphrase with words that the user enters.
• Hardware wallet: The next type of wallet is the hardware wallet. The hardware wallet can only be accessed through physical contact with the wallet by the designated person, who owns the wallet. It stores the user's private keys in a secure hardware drive that is accessible only to the user and usually uses a fingerprint scanner or biometrics to access it.