Bitcoin & Litecoin
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Bitcoin has been in news for a couple of years now. When preparing for various Government Recruitment Exams like SSC CGL, SSC MTS, IBPS PO, IBPS RRB, IBPS Clerk, IB ACIO, Insurance, Railways, etc., you will come across the Financial Awareness section. You can be asked about Bitcoin & Other Virtual Currencies like Litecoin (which is recently doing the rounds of the news) to check your knowledge about Banking & Finance. You can take any of our Online Mock Tests to begin your preparation for various Government Recruitment Exams. If you are fascinated by virtual gaming or virtual reality, you will surely be excited to know about virtual currency. What is this virtual currency? Can one feel this currency? Where do you get this currency? Let’s find out more about this innovative technology by reading this article on Understanding Bitcoin & other Virtual Currencies.
“Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.”
– Thomas Carper, US-Senator
Understanding Bitcoin – What is Cryptocurrency or Virtual Currency?
In layman terms, virtual currency or cryptocurrency is digital or electronic currency that is revolutionizing the way people transact. There are many different versions of the origins of cryptocurrency, but most experts would point at the Netherlands as the origin of cryptocurrency.
- Most cryptocurrencies in the world are not regulated by the national governments as they are considered to be as alternative currencies.
- Bitcoin was the first cryptocurrency that caught the imagination of thousands of people.
Understanding Bitcoin – How does it Work?
- Bitcoin is a virtual currency that is based on peer-to-peer technology to operate with no bank or central authority.
- The network carries out the maintenance of transactions and issuing of bitcoins.
- Bitcoin is an open source technology and nobody controls or owns it.
- All people who are interested in this kind of money can be a part of it.
- In other words, Bitcoin is a digital currency that can be used to make payments of any value without paying any fees for the transaction.
- Bitcoins run on the blockchain, which is a decentralized ledger.
- This ledger is kept updated and held by all users of the network.
If you want to create bitcoins, you need to generate blocks on the network. Each block is created cryptographically by using the computing power of its users and then appended to the blockchain. So users earn by keeping the network running.
| Note:There is a limit on the creation of bitcoins, which is directly built in the system. Thus, the value cannot be diluted at all. |
Understanding Bitcoin – Who Invented & Why?
Satoshi Nakamoto, an avid and cryptic internet user invented Bitcoin and introduced it to the world in the year 2009. Why did Satoshi Nakamoto invent this currency? This is the million dollar question that still needs some answering from the maverick. One good reason can be the fact that people always want to transact without the intervention of the government and hefty bank charges. Thus, Bitcoin is seen to be a tool for anonymous and private transactions.
Advantages & Threats – Understanding Bitcoin
| Advantages & Threats of Bitcoin | |
| Advantages | Disadvantages |
| Obviously, with no need of physical money, the government, and banks; Bitcoins have gained popularity in the recent years. The ease of transactions and the privacy factors are the biggest advantages of Bitcoins. | Although the advantages seem to be fantastic, the threats overshadow the advantages. Firstly, Bitcoin has technical issues and it is vulnerable to fraud and malicious attacks. |
“Bitcoin will become the new gold and re-align the playing field of central bankers and commercial bankers.”
– Jon Matonis, Vice-President at nChain
Other Virtual Currencies/Cryptocurrencies
Here is a list of virtual currencies
- Litecoin
- Ethereum
- Zcash
- Dash
- Ripple
- Monero
What is Litecoin?
- Litecoin is another Cryptocurrency or decentralised digital currency, similar to Bitcoin. This was created by Charlie Lee.
- The main difference between Bitcoin and Litecoin is that Litecoin has a more number of coins that can be created. It also has faster transaction rates.
- Litecoin’s algorithm allows for a total of 84 million Litecoins to be created. Bitcoin lags behind due to this algorithm as Litecoin’s capacity 4x larger than Bitcoin. This helps with 4 times faster transaction rate confirmation
- Confirming transactions help create new coins via a process known as ‘Mining’.
| Fun Fact:The inventor of Litecoin, Charlie Lee was a previous employee of Google. He also worked as an Ex-Director of Engineering with Coinbase. He calls himself @SatoshiLite on Twitter (Satoshi Nakamoto is the founder of Bitcoin!) |
Latest Updates on Bitcoin & Litecoin
Here are some latest updates on Bitcoin & Litecoin:
- Bitcoin’s price skyrocketed from approximately $600 to close to $5,000 in the span of just 12 months
- The hackers of WannaCry Ransomeware had asked ransom as Bitcoin!
- In recent news, Litecoin has overtaken the fourth place in the Cryptocurrency business by beating IOTA & Ripple.
- The 1st three popular cryptocurrencies are: Bitcoin, Ethereum & Bitcoin cash.
- Litecoin is stepping up its game with the market capitalisation of Rs 0.88 lakh crore recently.
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