Bitcoin is a huge topic of discussion nowadays. On one hand, countries like Japan considers bitcoin as a legitimate delicate, while on the other, JP Morgan Chase CEO James Dimon calls bitcoin is more than "a fraud”. Investors or traders of Bitcoin confronted disrupted circumstance after Shanghai-based BTCChina, a great Chinese bitcoin exchange, on Thursday said it would quit exchanging the cryptocurrency from September 30 last year, referring to fixing regulation, while small bitcoin brokers ViaBTC, YoBTC and Yunbi on Friday announced similar terminations. This sent a negative flag to the world in connection to Bitcoin.
One of the definitions can be "Bitcoin is a cryptocurrency, or a digital currency, that uses principles of cryptography for control and generation of units of currency. Bitcoin falls under the extent of cryptocurrency and was the first and most profitable among them. It is usually called a decentralized digital currency." Let's simplify it, Bitcoin is decentralized, what does that mean? Anything which is not centralized means it is not controlled by a person, a group, an organization, a business or not even a country or a government; can be called decentralized. But, if it is not controlled or governed by anyone, then how does Bitcoin work?
The makers (programmers) of Bitcoin, programmed a cryptographically secured currency in such a way that all its parameters are pre-defined. Like they defined what will be the maximum number of Bitcoins in the circulation, what will be the mining process, how the difficulty of the mining process would increase over a period of time and so on. So, Bitcoins are totally virtual coins intended to act naturally 'contained' for their appreciation, with no requirement for banks to move and store the cash. They also defined how the transaction will take place, and how the ledger will get updated, where the ledger is stored and if the ledger can be modified or not. Now, the programmers wanted this program to run on a secured server, which can not be tampered, hacked or crashed by anyone in the world. They wanted to make such a trustless system where once the program is deployed, even the programmer can not edit or modify it. Blockchain technology answered their question.
A blockchain, originally blockchain, is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. The Harvard Business Review describes it as "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way." For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.
In simple words, it is a secure database, stored on multiple devices which are linked together in a network of devices. The network is secure itself because multiple copies of the ledger are stored each device and if a hacker tries to hack into one or few of the devices in the network, the network throws that device out of the network without affecting the functionality of that blockchain. That's the primary reason why people believed such first attempt at making a decentralized cryptocurrency. Slowly, Bitcoin gained acceptance from people all over the world and the demand increased, but the supply is limited. Based on the concept of demand and supply, the value of Bitcoin appreciated so much that today is worth more than $15000 per Bitcoin. When you claim bitcoins, they have appreciation and exchange similarly as though they were chunks of gold in your pocket. You can utilize your bitcoins to buy products and ventures on the web, or you can store them and expect that their appreciation increments throughout the years. Bitcoins are exchanged from one individual 'wallet' to another.
Just like a little wallet in your pocket, A digital wallet is a little individual database that you store on your PC drive, on your cell phone, on your tablet or someplace in the cloud.