Bitcoin (BTC or XBT) is a form of digital currency released in 2009. This is an electronic cash system (ECS) and the main figure in the cryptocurrency world. Today the amount of bitcoin in circulation exceeds 7 billion.
Crypto-currencies can reduce transaction fees, unlike traditional online payment mechanisms. The process is managed decentrally, without the usual mediators such as banks.
Members of the online crypto-exchange buy and sell bitcoins, they can be bought and sold both online and offline. Offline bitcoins can be purchased directly from an individual owner of this currency or through a Bitcoin ATM. There are 800 bitcoin ATMs around the world, most of them (500+) are in the United States. Bitcoin-ATMs are connected to the Internet and allow users to exchange fiat currency to bitcoin.
Many markets, called “bitcoin-exchangers”, allow people to buy or sell crypto-coins using different currencies. The purpose of the bitcoin transaction is to transfer the agreed amount in bitcoins to the proprietor and to get the bitcoin-address.
Bitcoin-transactions take place between users directly, without an intermediary. Bitcoins can be exchanged to other currencies, products and services. As of 2015, nearly 100,000 traders and suppliers started taking bitcoins as a payment method. Cryptocurrency is not regulated by any country or authority, but, in the same time, it can be used for buying goods and making international payments.
“Blockchain” is a public accounting data system that records operations with Bitcoins. Blockchain operation is carried out by communication nodes in the network and specialized software.
Crypto-currencies are stored in a specific “digital wallet”. They exist in the cloud or on the user’s computer. An electronic wallet is a type of a bank account that exists online. It allows crypto users to send or receive digital coins, pay for goods or store their money.
Bitcoin transaction is the cryptocurrency transfer between bitcoin wallets and a follow-up record in a blockchain as a proof of transaction.
Bitcoin wallets store a secure information called “Secret key”. The key is used for confirming transactions and providing financial evidence from the owner of the wallet.
In order to send or receive virtual currency a user should have bitcoin-wallet. This is a software product that is used for storing, sending and receiving coins to the bitcoin address (account number) by using private and public keys. A private key is a “secret code” mathematically associated with a public key that confirms transactions. The public key is used to verify the owner of the address to receive funds. All transactions’ information is being broadcasted between users of the network within 10 minutes, through a process called “mining”.
Mining is a distributed “consensus-system” that confirms deferred transactions, included to the blockchain. It allows different computers to reconcile system status, so it is called “consistent”.
Such countries as Japan and China already turned to legalizing of using the bitcoins, while India is still preparing for a digital revolution. This country has not recognized electronic currencies as official payment method yet. The Reserve Bank of India has already warned users, owners and traders of virtual currencies about the risks.
The creation, trade or use of digital currencies as a means of payment is not sanctioned by public financial authorities or central banks. The absence of official documents, registrations or approvals permits such an activity.
And, although in December 2017, India’s finance minister has told the media that the government has not considered bitcoin as a legitimate payment method and has been working to formulate policies for such currencies, the number of bitcoin users from India has not decreased, and every day more and more people are showing interest in investing in the cryptocurrency. At the moment, about 10% of overall transactions in bitcoins occur in India.