What is Bitcoin?
Gone are the days when transactions took place by exchange of goods with cash. The advent of e-commerce due to technological advancements took the world of business by storm. As a result, the trend of cashless transactions gained a trend with people resorting to using their electronic media such as credit and debit cards to perform purchases. When the economies of the world were working towards transforming themselves into becoming cashless economies, forerunners relentlessly continued to work on developing and implementing digital currency. Though several pioneers worked on the area of virtual money, it took excellent shape in the hands of Satoshi Nakamoto who introduced Bitcoin to the world.
The rise in the popularity of virtual currency makes it important for us to comprehend what it is and why we should inform ourselves about it. The first original virtual money (also called cryptocurrency) that gained popularity in a short period is Bitcoin. So, let us widen our understanding in this area by learning more about Bitcoin.
What is Bitcoin?
Bitcoin is the first decentralized form of digital currency which is based on an open-source protocol. This digital transaction network allows us to make instant payments without having to involve a clearinghouse or bank. Cryptocurrencies are not issued by central banks instead Bitcoin is noted to be a peer-to-peer currency that can be transferred through the internet. No organization, bank, company or individual has a hold on the bitcoin network. Bitcoin supply is controlled by software in agreement with its users.
How does Bitcoin work?
Like all money, Bitcoin (commonly known as online money) is also stored in a wallet that could be online or offline. You can use this wallet just as you use your physical wallet. The only difference is instead of a hand to hand transfer, you will be receiving and sending Bitcoins directly from/to your digital wallet. Every single transaction undertaken using Bitcoins is recorded in a virtual public ledger called the blockchain. Once all confirmed transactions are recorded in the ledger, the digital wallet will be permitted to calculate the balance spendable and thereby allowing the spender to plan future transactions.
Now that we know what a Bitcoin is and how it works, let’s look into the reasons why one should consider adopting this mode of transaction:
Quick transactions: Bitcoin is an effortless and quickest way of making online payments using the internet. As the transactions are performed on the cryptocurrency network, banks and other clearing houses are not involved thereby making it one of the fastest modes of transaction.
Decentralized payments: All the payments that take place on the Bitcoin network are regulated by blockchain thereby eliminating the presence of other institutions such as banks. The regulator of the digital transaction network ensures transparency, storage and transfer of money.
Security: As all transactions are recorded in the digital public ledger, they are visible to all. This makes it difficult for people to indulge in fraudulent activities. Some users choose to be anonymous, but others who share personal information are also ensured security as their information is encrypted and kept away from miscreants.
If you choose to transact in the Bitcoin network, you could be part of the revolution that is taking ‘cashless and private transactions’ to the next level.