‘Bitcoin’ is a term which is making rounds and could be seen driving its way into headlines. Amidst this entire buzz, most of the people have been scratching our heads figure out the concept of Bitcoin, its history and its use.

Well, you need scratch your heads further for here you can get all the answers here.

What is Bitcoin, really?

Bitcoin is a digital currency, so there are no coins to mint or bills to print. There is no government, financial institution or any other authority which controls it, so it’s decentralized. People who have Bitcoins in the system are anonymous. Also, there are no account numbers, names, social security numbers or any other identifying features connecting Bitcoins to its owners. Bitcoin uses blockchain technology and encryption keys to connect buyers and sellers. And, just like diamonds or gold, a Bitcoin gets “mined.”

History of Bitcoin

Bitcoin was the first recognized cryptocurrency—a digital asset that is secured with cryptography and can be exchanged like currency. The anonymous Satoshi Nakamoto—probably an individual or a group whose real identity is not known is behind the development of Bitcoin. It stated that the goal to develop the technology was to create “a new electronic cash system” that was “completely decentralized with no server or central authority.” In 2010, when for the first time someone decided to sell their Bitcoins to purchase two pizzas for 10,000 Bitcoins. Today those Bitcoins would be worth more than $100 million today. In 2011, Nakamoto shared the source code and domains with the Bitcoin community and hasn’t been heard from again.

How can one mine Bitcoins?

People or precisely extremely powerful, energy-intense computers mine” Bitcoins to make more of them. Currently, there exist about 16 million Bitcoins, and it leaves only 5 more million available to mine because Bitcoins developers restrict the quantity to 21 million. At the end of the day, each Bitcoin can be divided into small parts with the smallest fraction being one hundred millionth of a Bitcoin and it is called a “Satoshi,” after the founder Nakamoto. The mining process includes computers solving an extremely challenging mathematical problem that gets more and more difficult over time. Every time a problem is solved, one block of the Bitcoin is processed and the miner gets a new Bitcoin. A user sets up a Bitcoin address to receive the Bitcoins they mine. It is like a virtual mailbox with a string of 27-34 numbers and letters. But with a difference, contrasting to a mailbox, the user’s identity isn’t attached to it.

How can Bitcoins be used?

Apart from mining Bitcoins they can also be earned. You can accept Bitcoins as a means of payment for goods or services. Setting up a Bitcoin wallet is a simple as setting up a PayPal account and works the same way you use any digital money. There are some websites that will pay in Bitcoins for completing certain tasks. Once you have Bitcoins, there are a number of ways to lend them out and earn interest. There are even ways to earn Bitcoins through trading and lately Bitcoin futures were begun as a rightful asset class. Moreover, you can trade your regular currency for Bitcoins at Bitcoin exchanges, the largest one being Japan-based Mt. Gox which is handling 70 percent of all Bitcoin transactions. There are more than 100,000 merchants who accept Bitcoin for payment for everything from gift cards to pizza and accept it.

What are the probable risks?

There are both risks and opportunities with Bitcoin. It has been tempting criminals for its anonymity and lack of regulation. Since there is no governing body, it can be tricky to resolve issues if Bitcoins get stolen or lost. In 2014 Mt. Gox went offline, and his 850,000 Bitcoins were never recovered. Once a transaction hits the blockchain it is final. As Bitcoin is comparatively new, there are many unknowns and its value is unstable and can change significantly on daily basis.

As the technology continues to grow and mature, there will be a number of modifications.