Before delving into bitcoins, one should know about blockchain technology and how it is used in today’s world. Blockchain is the interlinked ledger made of code. This code is linked in such a way that any change made in any part of the chain is to be recognised by all persons involved in that code. This makes the blockchain foolproof and hack-proof as hacking or altering one part of the block has to be authorized by all the parties in the process. So even if the hacking party manages to mimic a handful of authorizers, achieving control of the whole group control is impossible.
What is bitcoin?
Bitcoin is a product of the blockchain technology discussed above and it is a monetary mechanism where it can be sold and bought like any other financial product. The first bitcoin was invented by Satoshi Nakamoto, whose real identity is still unknown and never been confirmed of this invention. The bitcoins are synthesised by bitcoin exchanges by recording the transaction from the exchange of one bitcoin. Many people are involved in the synthesis of bitcoins popularly called bitcoin mining. Though the limit to mine is just 21 million, the vigour to mine has never been reduced.
Work of bitcoin exchange in this scenario
Just like the currency exchanges, stock exchanges or any other of that sort. They engage in-
- Trading of bitcoins.
- Buy bitcoin for other currencies.
- Maintaining confidentiality of information of customers.
- Online facility to exchange bitcoin with less transactional charges.
- Exchange facility for 24/7 irrespective of the customer location.
- Anonymizing the transfer details in countries where bitcoin exchanges are restricted.
Most countries allow bitcoin and they are also planning to come up with their own digital currency to reduce the scepticism of the citizens.