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What is Bitcoin? How does Bitcoin work?

   Bangladesh government has been cracking down on bitcoin miners for quite some time now. What is actually going on there? The deeper I studied, the more interested I became in Bitcoin. For example, Bitcoin was created by an anonymous person or group whose true identity remains unknown. They introduced themselves as Satoshi Nakamoto. Satoshi Nakamoto has become the world's richest person or organization Bitcoin. But Satoshi Nakamoto is only one part of this incredible playground. Frankly it's a white world. What's going on there? It's hard to get it into our head. And that's why it felt like this is the right time to explain to the audience in simple terms how cryptocurrency and bitcoin work or what will happen in the future.


Bitcoin is a story. Stories to influence us. History shows the form of currency and financial system we see today. But that was not the case. There was a time. When exchange system was in place instead of currency. That is to exchange an object for another object. For example, some bread in exchange for fish or some fruit in exchange for some eggs etc. But the problem with this system is that what I have may not be needed by others. And in that case I can't take anything in return. Our ancestors understood that for exchange they needed something as an intermediary that would determine the value of various objects or goods. Many things such as cattle, oysters and once precious metal coins began to be used for this purpose. After hundreds of years, states began to use paper money. whose value is determined by the price of gold. It is called gold standard. But in 1971, many countries including America abandoned the gold standard. This means that the value of the dollar will no longer be determined by gold.


Rather, it will be determined according to the instructions of the government and with the consent of all. This gives governments and central banks more power to control the money supply and makes it easier to change monetary policy during financial crises. Such money is called fiat money. whose value is not determined by gold. Rather, it depends on the government and the trust we have in the government. That is, the basis of this system is the people's trust in the government. But what will happen? What if we don't trust the government? In the late 1980s, Cipher Monks emerged who were against central administrations such as governments because governments could use people's information to monitor them. Cipher Pump advised people to use cryptography. Through which communication and information sharing will be possible without such monitoring. Later, this technology of cipher punk was used in Bitcoin technology. A global economic crisis was seen in two thousand seven and two thousand eight years. The main reason was the withdrawal of risky loans from banks.


 It is so pronounced that it caused the collapse of one of America's largest banks. Named Lehman Brothers.


During the financial crisis of 2008, a three-part paper called Wife Paper appeared with the headline: Bit Coin: A Peer-to-Peer Electronic Cash System. The pseudonymous author of this paper is Satoshi Nakamoto. In this nine-page paper, Nakamoto explains his peer-to-peer electronic cash system. Through which digital currency can be directly exchanged with each other without the help of any financial institution. Nakamoto uses cipher punk technology. Which we currently know as Block China technology. Using mathematics, computer science and cryptography, Nakamoto introduced a currency that could be exchanged without trusting a central administration. The main goal of Bitcoin was to solve the problem of trust.


Let's stop here for a bit. I understand the history. But what is the Bitcoin thing? How does it work? What can be carried in the wallet? What doesn't go? No no. Bit coins have no material or physical existence at all. It is a completely digital currency. What is the Blockchain approach to understanding how Bitcoin works? It is important to understand that. To understand Bitcoin simply, it can be compared to the accounting of transactions recorded in a ledger. Banks also work in roughly the same manner. What transactions were made from an account throughout the day? That is recorded by the bank in its own system and through that they understand that the transactions were valid. This way they make sure that whoever has 1 lakh rupees in the bank cannot spend more than 1 lakh rupees but the purpose of Bitcoin is to decentralize the currency.


For this reason, Bitcoin uses a peer-to-peer ledger or distributed ledger system that Nakamoto explained in his phase paper, meaning that the ledger or ledger is distributed among all computers or nodes in the Bitcoin network instead of being under a central administration. Anyone can join this network just by downloading the BitPoint software. Whenever a transaction is organized each computer will determine through complex algorithms whether the transaction is valid or not. When all computers across the network agree that the transaction was valid, the transaction is permanently recorded in the ledger or ledger. If a particular computer or note tries to make an illegal transaction appear valid, all other notes will invalidate it. Each of these ledgers or blocks holds a certain amount of transaction accounts. which is linked to the previous ledger in the chain and no public identity is used during these transactions. Rather each person has a public and private key or keys. Which consists of many numbers and letters. The private key is used for a digital signature and the public key is used to validate the private key. This process of validating blockchain transactions is called mining.


. Each miner gets some bitcoins as a reward for successfully mining each block. So that they can do mining work later. If someone hacks a block and tries to do something illegal there, then all subsequent blogs will become illegal. Because of this it is very easy in Bitcoin to figure out which block has been hacked. Any person can see all the transactions of the block from the beginning to the end. But can't change it. That is, it is a currency system that is able to transact without trusting any central administration.


 Even today, the account of the first block of Bitcoin, which Satoshi Nakamoto thought up in 2009, can be traced. This record shows that Satashi Nyakamto was awarded fifty bitcoins for mining the first block. This first block is usually called the genesis block.


Nakamoto set the software code supply limit at twenty one million. There are currently only two million bitcoins left to mine. But one more important question remains? Bit coin reached today's price? Can this digital currency, which is undoubtedly invented with first-class technology, really cost thirty-six thousand one hundred and twenty dollars? It is certainly a question of demand, but how is this demand created? After Nakamoto published his thesis paper in 2009, he first mined the Genesis block, and this led to events that would later change the future of Bitcoin. In the early days, Bitcoin was mined only as a hobby.In the 2000s, Bitcoin had no practical value. But that changes.


In May of 2010, Lazlhani created a Bitcoin discussion forum where he offered two large pizzas for 10,000 Bitcoins. Two days later Lazlu reported that he was able to buy the bitcoins he wanted in exchange for twenty-five dollars worth of pizza. As a result, this is the first time someone is able to buy any item using Bitcoin. May 22 is officially called Bitcoin Pizza Day. By the end of that year, the price of Bitcoin had increased from zero to forty-nine cents, or zero and three-nine dollars, and Mt. Gox, or MT.Cox, was established for the first time to easily trade Bitcoin with ordinary money. In 2011, the price of Bitcoin rose to one dollar.


 Suddenly some more types of fifty currencies started coming in the market. These same blocks are made using Chinese technology. But where the purpose of Bitcoin was to create digital currency, the purpose was quite different. Although it was created using the same blockchain system. Bitcoin technology suffered a lot due to several early scandals and notoriety. Due to the use of private and public keys, the identity of Bitcoin users remains completely anonymous and as a result criminals and terrorists use it for various illegal transactions. A notorious dark cave website called Silk Road. Where Bitcoin could be used to sell illegal drugs. As a result, Bitcoin's name became associated with the criminal world, and its influence is still felt today. Another scandal in Bit Coin was the fall of Mount Gox.


 Seventy percent of bitcoins were traded through it and it is said that Mount Gox shut down its website after stealing a large amount of bitcoins. As a result, it has not been possible to find any trace of it even today. But Bitcoin remains in demand even in this crisis. Various companies and websites are launched for Bitcoin transactions. Such as Bit Pay, Coin Gate etc. In 2013, the price of BitCoin reached 1000 dollars. But it later came down to one hundred dollars. 2017 was the most incredible year for Bitcoin. In Japan that year a law was passed through which Bitcoin became a legal currency there. At this time, the excitement about Bitcoin reached its peak and the name of Bitcoin was on everyone's lips. The greed on Bitcoin in the market is increasing and it is going towards an irrational state. In the stock market, various companies are able to increase their share price by adding block chain to their name. In December 2017, the price of a bitcoin increased to twenty thousand dollars. But just as quickly as Bitcoin's excitement and price rises, so does its fall. Within a few days of reaching the maximum price, its price starts to decrease again. One of the reasons for this is that the government started taking various measures in this regard and cryptocurrency was banned in China. Fears of losing bitcoins quickly spread and the price of the cryptocurrency fell by eighty percent. 2018 was a devastating year for Bitcoin.


 This year the price of Bitcoin fell to three thousand two hundred dollars. But even after that, the price of Bitcoin has not fallen below thousand so far. And just three years after this collapse, the price of Bitcoin rose to eighty-three thousand one hundred and twenty dollars. But why this price increase of Bitcoin. This is because various financial institutions have started showing interest in Bitcoin. This is the L mask. Purchased $1.5 billion worth of bitcoins and said they would accept bitcoins as payment. As the American Federal Reserve continues to print money to stimulate the economy and the resulting fear of inflation increases, people's perception of Bitcoin is changing day by day.

 Where Bitcoin was previously used as a currency, it is now used as a fixed asset like gold or land. The price of which will not decrease even with inflation and can be stored for later sale. As a result, where financial institutions had no interest in Bitcoin before, it is currently growing. But to overcome the trust issue, Bitcoin ultimately has to rely on people's trust. Because for Bitcoin to be used, people first need to trust it as a currency. However, many believe that Bitcoin has no practical value and that its current price has been inflated by various conspiracies. In 2017, Bangladesh Bank also issued a circular warning against Bitcoin transactions. It is said that the virtual currency is not issued by the legitimate authority of any country, so there is no recognition of financial claims against it.

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