What is Bitcoin and how does it work? Is it legal? Who’s behind it?
Ever wondered what is Bitcoin and hoes does it work?. Some people might say its illegal but it it so?. Since this is a four-part question, let me consider each question individually and give you four answers. So lets start….
What is Bitcoin?
Bitcoin is the first and the most popular cryptocurrency introduced to humankind. It was created in aftermath of 2008 recession, which happened mostly because of irregularities in banking sector with some help from the government. It is a peer-to-peer digital cash system. And it helps you send and receive money over the internet securely and at a fraction of cost compared to the traditional banking channel.
How does Bitcoin work?
A Bitcoin is simply like a computer file stored in a ‘digital wallet’ app on a smartphone or computer.
You can send Bitcoins (or part of one) to a digital wallet. Every single transaction is recorded in a public list called the blockchain. That makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies or undo-ing transactions.
Bitcoins are designed in such a way that there will ever be only 21 million BTC in total. It is rare and scarce and can be used both as a means of exchange and a store of value.
Is it Legal?
Bitcoin and other cryptocurrency is not illegal to own, invest in, or trade in, by U.S. laws. Cryptocurrency exists outside of a nation or bank, so it may or may not be allowed depending on regulations for specific transactions or in particular areas.
In 2018, the RBI did impose a ban on banks and other financial institutions from servicing any crypto transaction. However, the ban never specified that trading in Bitcoin was illegal – meaning, you could still transact in Bitcoins peer to peer. After nearly two years of battle, India’s crypto-community won its battle against RBI’s circular banning regulated financial institutions, from offering services to crypto-related businesses. In March 2020, the Supreme Court of India passed a judgment holding RBI’s circular unconstitutional.
So, now investing is not only legal but also banks are now free to facilitate any transaction relating to crypto.
Many retailers consider cryptocurrency like Bitcoin to be unacceptable. You will not be able to pay your taxes or pay back most loans with cryptocurrency. It is generally accepted only within certain types of domestic industry, although it is much more likely to be accepted in international exchanges.
Who is behind it?
Well, Bitcoin first appeared in a white paper under the pseudonym Satoshi Nakamoto. Satoshi’s identity remains unknown till today; we do not know if it is a he, she or they.
At present, Bitcoin is owned by the community as a whole. Since it is an open-source initiative, with no single owner behind it, we can say it is a part of the Bitcoin community.
So we have come to end of the post. Hope you liked the quick overview of what is bitcoin and how it works. See you soon. Check out our other posts at Burgee Byte.