Bitcoin remains the most popular cryptocurrency till date – so much so, that many of us had actually heard the term Bitcoin way before we actually came to know about crypto currencies themselves. To put it simply, Bitcoin is a type of virtual money – a computer program that facilitates the exchange of value of money among people. It is the first cryptographic commodity that can be exchanged just like cash. You can trade it all on your own without the intervention of brokers. If you’re new to crypto currency you must be intrigued by Bitcoin since, as we have already stated, this one remains the most popular crypto currency.
Bitcoin- A Bit of History
Before delving into the workings of the crypto currency, let’s take a sneak peek into its history. A person carrying the pseudonym Satoshi Nakamoto created this currency in the year 2009. It can safely be claimed that Bitcoin was the result of the cryptographic protocols that shaped security model used by a team that was engaged in the protection of commerce, communications and finance. With the passage of time, Bitcoin emerged as the first digital money that promoted peer-to-peer electronic cash system.
How Does Bitcoin work?
In order to understand the working of Bitcoin, one must, first understand what blockchain is because that’s the underlying technology defining the functionality of this popular crypto currency. It is a digital ledger. Since Bitcoin is not physical money, you cannot own it like cash. However, you can store it and protect it with the help of a private key.
Another very important point to keep in mind, if you’re dealing with Bitcoin is that since it is not controlled by a financial institution, jurisdiction or bank it is not backed by printed bills or even mining of coins. Thanks to the complete anonymity no user or transaction details are recorded.
So the question remains – how exactly are the transactions happening in that case then? The answer is – through mining. Put in very simple words, mining or extraction entails computational algorithms driving complex mathematical puzzles. Once the puzzle is solved, a particular mining block is mined and the user receives a reward in the form of Bitcoin.
There are many who believe that in the crypto-driven future Bitcoin will emerge as the standard digital money. You can buy Bitcoins from one of the popular exchanges in Australia. It’s true that there is no dearth of such exchanges in the country but make sure you’re surveying the credentials of multiple names before zeroing in on the most trusted Australian crypto exchange. Do find out about the reputation of the exchange and its track record before signing up for services.
Do you need to pay taxes on Bitcoin?
Yes you do. Keep learning about the tax on cryptocurrency in Australia. The taxes might vary depending on whether you’re a crypto trader or an investor.
There is an increasing number of investors willing to explore Bitcoin. However, don’t forget that the crypto market is vulnerable to fluctuations and the lack of regulations is perceived as a hindrance on the path of Bitcoin’s growth as well. However, despite these concerns, there are many financial experts around the globe who opine that Bitcoin is going nowhere and that in the due course of time it will be regarded as one of the most credible methods of mainstream payments.