Digital currency is an alternative money that has given a new meaning to currency. Bitcoin one of the virtual currency founded by Satoshi Nakamoto in the year 2009 is a famous one that is gaining popularity and nearly 12 million bitcoins have been generated already. It has even hit the news a couple of days ago..This Bitcoin thing is nothing but an electronic money that originates from a open source software with complex mathematical algorithms that operates on a peer to peer network. (Yes peer to peer in the sense just like how your torrent and Skype things work ). These digital cash are not issued by any central banks or organization it does not possess any central monetary value. It is just a replacement for the existing currency in a digital way. The Transactions are shielded by cryptography so some even address it as cryptocurrency. But its not a good place to store or save money you buy it you spend it or you earn it and through some exchange transfer it back to your local currency. In order to use these bitcoins all you have to do is get some knowledge about them get yourself a wallet buy some bitcoins and start your digital transactions.
Choose Your Wallet
Just like how you keep your local currency in your wallets you have to choose your electronic wallet here be it mobile or web or your own computer you can choose the one you are convenient with. But the essential thing to be noted is you must have a back up of the same because once your hard disk crashes the bitcoin stored in it gets lost. Using your bank account you can buy bitcoins from an exchange or from a friend or you could earn it and save it in your wallet.
How does it work ?
Once you install your wallet you will get your first address using which you can perform transactions but the address is like a one time key it should be used only once. There is a private key that digitally signs the transaction to authenticate the sender and its encrypted with the public key of the recipient so that only he can decrypt it using his private key. The transactions are also sent to some bitcoin software client active in the network for verification, the confirmation of transaction by other users is termed as Mining. There is also a public ledger called the block chain where all confirmed transactions are accounted. To Avoid double spending that is like spending the same money twice there are people called miners to bring it to the light.
Even though its generated from an open source software the protocols cannot be changed it would work only if there is an agreement about it between the users. So the complete bitcoin network is controlled by all the users. Recent news throw light that only very few use it for real commercial and retail purposes and huge amount of transactions are tentative investment matters. And also there are few cases that report bitcoin used for illegal activites like payment for drugs etc. Yet next time you could pay for your online gifts or books or games through this new electronic way. And yeah Let Good things go good and bad things go bad, altogether this is one good forerunner that leads the way for a new age digital currency.
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