BITCOIN
I’m sure you’ve heard about Bitcoin. It is often being interchangeably used with cryptocurrency and even Blockchain.
Bitcoin is frequently used interchangeably with “cryptocurrency” and even “blockchain” but what exactly is bitcoin?
Bitcoin is a form of cryptocurrency/digital asset. In fact, it is the first ever cryptocurrency and is still on top of the crypto world today. BTC or bitcoin was launched in 2009 by Satoshi Nakamoto, the creator of bitcoin. Satoshi’s identity is still a mystery today, 11 years later. The mysterious Satoshi left the BTC community in mid-2010 in the hands of prominent members.
Okay, so you got the gist of bitcoin. Now I’ll explain more.
Bitcoin is a digital form of cash. You can’t touch it but you can own it, digitally of course. Bitcoin basically created the blockchain because Satoshi wanted no 1 entity or person to have impeccable control. Thus, bitcoin has no central bank, it is decentralised. Bitcoin is run by thousands of computers distributed around the world, and all you need is to download an open source software. Those people that download the open source are called “miners”. I’ll explain it further down.
So how does BTC/Bitcoin work since it is decentralised?
By using blockchain. Every single transaction is recorded in the blockchain or public ledger which can be viewed by everybody because it is open and transparent. Once it has been processed and “approved” it will then be put in a block along with other processed transactions. Once the block is filled with transactions, it is chained to other blocks. Hence, “Blockchain”. Can you picture it? No? Don’t worry, here’s a picture for you.
Is it possible for one block to be altered after it is “chained”?
Well, to do that it would cause a domino effect. To change 1 block, you have to change all the blocks that came before it. This would require a huge amount of electricity which is probably equivalent to 1 country, thus impossible.
Where does miner come into the picture?
Picture you making an online transaction using your local bank. First, you key in the details, name, account number which bank etc. You then get a TAC or 2FA ot verify your transaction and once that’s done, voilà, money is deducted and the bank will transfer your funds to your recipient.
Miners are the ones that process your transactions. They function almost similarly like the banks. They “approve” your transaction and includes it into the block. Miners have to solve a ‘puzzle’ for them for the transactions to be fitted into the block and each block takes about 10 minutes to mine.
Why are people attracted to bitcoin?
- The transaction of Bitcoin or basically any cryptocurrency is transparent for everyone to see. It is also the safest way to transfer money because no transaction can be altered without causing a domino effect.
- Your identity is still safe and unknown to the public. Even though, it is transparent, only the transaction id and wallet address can be seen which are a combination of random numbers and alphabets.
- All you need is an internet connection to transfer or receive money anywhere.
- There are only 21 million bitcoin created. The quantity is scarce and why it is also called by some as “digital gold”.
Is bitcoin legal?
In the Malaysian context, bitcoin is legal to be traded. However, it is not recognize as a form of currency nor is it legal tender in Malaysia so please do not use bitcoin to buy your favourite nasi lemak. You should also be aware that there are only 3 exchanges in Malaysia that is regulated by Securities Commission and Tokenize Malaysia is one of those exchanges.
Hope this helps you understand more about Bitcoin!
