Bitcoin has certainly become widespread and popular in just a short span of time. Numerous companies and even million-dollar businesses are now accepting and using this currency. From the biggest users up to the smallest ones, bitcoin has definitely established itself as an intrinsic part of life. But what is bitcoin anyway?
Bitcoin is defined as a type of digital currency that is believed to come to existence in the year 2009. The concept of Satoshi Nakamoto, a mysterious developer, and such concept was set out in whitepaper. One of the notable things about bitcoin and perhaps one of the reasons it gets overwhelming attention is that it promises lower fees on transactions as compared to the usual web-based payment mechanisms. Unlike currencies issued by the government, bitcoin is operated by decentralized authorities.
There’s really no physical bitcoin, just balances stored on public ledgers in cloud. These balances along with the bitcoin transactions are evaluated and verified by a huge amount of computing capacity. Bitcoins aren’t backed or issued by government or any bank. These are not even considered as individual bitcoin that is valued as commodity.
Learn More about Bitcoin
Bitcoins are cryptocurrencies. Bitcoin balances tokens are being kept with the use of private and public keys. These keys are a long string of letters and numbers connected by means of particular mathematical algorithm encryption, which was actually utilized to create them. Just like a bank account number, the public key functions as the address distributed and shared to the world where other people can send bitcoin to.
On the other hand, the private key is being compared to ATM PIN and is intended to be a protected secret. This key is only utilized in authorizing transmissions of bitcoin. Individuals need to know the distinction between bitcoin keys and Bitcoin wallets. The latter is a form of the digital or physical device enabling Bitcoin trading and permitting the users to trace coins ownership. Sometimes, the term wallet is quite misleading since the decentralized nature of Bitcoins indicates that it’s never stored in wallets but on blockchain decentrally instead.
How Bitcoin Works
One of the very first digital currencies that utilize peer to peer technology in enabling immediate payments is bitcoin. Self-regulating companies and individuals with governing computing power and those who join in Bitcoin network, which is categorized as “miners.” These miners are thought to be the decentralized authority that enforces the bitcoin network‘s credibility.
The new bitcoins are being released to miners at a fixed but declining rate periodically and that the total supply of bitcoins reaches 21million. There are around 3 million bitcoins to be mined as present. In such way, bitcoin, as well as other currency that is generated through the same process, operates in different manner than fiat currency.
In a banking system that is centralized in nature, the currency is issued at a certain rate that complements the good’s growth, trying to keep stability of price while bitcoin, known as a decentralized system sets beforehand the rate of release ensuring that it’s in accordance with an algorithm.
Advantages of Bitcoin
Bitcoin promises to deliver numerous advantages over localized currencies. These advantages include but not limited to, the following:
- Irreversible Transactions
Bitcoin is actually the only payment system that is completely irreversible and can’t be charged back. It is for this reason that you still need to practice caution when sending bitcoins and ensure that you’re sending them to reputable vendors.
- Appreciating Value
The value of bitcoin is high since its inception. This has been stable and is increasing its value steadily on a daily basis.
- No Paperwork
Any individual from any country can accept bitcoin in just a few minutes. Proof of address, passport, ID card is not really required. All you need to do to begin sending and receiving bitcoins is to download the Bitcoin wallet programs then generate a Bitcoin address.
- Cheap and Quick Transactions
Fees are low when making some bitcoin transfers as compared to conventional ways of sending money. International wire transfers usually take few days wherein bitcoin transactions are confirmed at once, usually within an hour.
With all these amazing benefits, you are now probably convinced to use bitcoin now.