What is Bitcoin?
Bitcoin is a form of digital currency which was created and held electronically without any control made by anybody nor it is printed like a United States Dollar or Euros. It is the first sample of a growing category of money known as a cryptocurrency.
What makes Bitcoin different from regular currencies?
It can be used to electronically buy things. In that matter, it is like traditional currencies like United States Dollars, Euros, or Japanese Yen, which are also traded digitally. However, Bitcoin is most importantly special. The thing which makes Bitcoin different to classic or traditional money is that it is decentralized. No single institution or individual controls the Bitcoin network.
This by all matters puts some people at ease for the fact that it means that even a large bank cannot control their money.
A software developer called Satoshi Nakamoto proposed Bitcoin, which firstly was an electronic payment system based on mathematical proof. The first idea was to introduce an independent currency no managed by any authority. The funds is transferable electronically, instantly, and with at a very low transaction fee.
No! This currency is not printed and is not tangible in the shadows by a central bank. Bitcoin is not accountable to the people. Instead, Bitcoin is created digitally, by a community of people that anyone can join. This network processes the transactions made with the virtual currency effectively making Bitcoin its own payment network.
So let’s use unlimited Bitcoins
That’s actually incorrect. The Bitcoin protocol – the rules that make Bitcoin function – says that only 21 million bitcoins can ever be created by miners. However, those coins can be divided into smaller parts (the smallest divisible amount is one hundred millionth of a Bitcoin and it is called a ‘Satoshi’, named after the founder of bitcoin).
What is bitcoin based on?
Traditional currencies are based on Gold or Silver. It is a fact you knew that if you handed over a Dollar at the bank, you could get some gold back (Despite the fact this didn’t actually work in practice). But Bitcoin isn’t based on Gold; it’s based on mathematics. Worldwide, people are using softwares that follow a mathematical formula to produce Bitcoins. The mathematical formula is freely available for you to check out.
The software is an open source, this means that anyone can look at it to catch the fact that it does what it is supposed to.
What are its advantages?
Bitcoin has several important advantages and features that make it apart from government-backed currencies.
1. It is decentralized
The Bitcoin network is not controlled by one central authority. Every machine that mines Bitcoin and processes the transactions makes up a part of the network, and those machines work together. This means in theory that one central authority cannot tinker with monetary policy and cause a meltdown.
And if some part of the network goes offline for some reason, the money keeps on flowing.
2. Setup with ease
Traditional banks make you jump through stages simply to open an account. Setting up merchant accounts for payment is another way-too-long task. However, you can set up a Bitcoin address in seconds, no questions asked and no fees to pay.
Kind of yes. The users can hold multiple Bitcoin addresses with no linking to names or personal information.
Bitcoin stores the details of each and every single transaction that is ever happened in the network. This is done in a huge version of a general ledger called the Blockchain.
So, if you have a publicly used Bitcoin address, anyone can know how many Bitcoins are stored at that address. But they will not know that it is yours.
5. Transaction fees?
Your bank may charge you 15USD fee for international transfers. Bitcoin doesn’t.
6. Quickly processed
You can send money anywhere in just a few minutes to be received to the other end as soon as the Bitcoin network processes the payment.
7. No return
If your Bitcoins are sent, you cannot get them back unless the recipient returns them to you.