Bitcoin

3 years ago
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Introduction

Created in 2009 by Satoshi Nakamoto, which is an alias, Bitcoin was introduced as a virtual currency that would allow for transactions without the meddling of banks. You may use Bitcoin to buy an Xbox game or book hotels or shop online, and why not, trying to get rich via trading.

Description

Bitcoin cryptocurrency is a peer-to-peer virtual cash system that is designed to not depend on a monetary authority. These are anonymous and untaxable transactions that cannot be monitored or tracked by any entity. The concept was first thought of by the “Cypherpunks mailing list” operators, where the system would utilize a distributed database across the nodes of a peer-to-peer network. These would be well-secured transactions protected by cryptography.

It is true that bitcoin transactions are recorded in a public log, but the identities of buyers or sellers are always kept confidential. A third party may only see their wallet IDs, and such privacy has made it easy for drug addicts and criminals to use Bitcoin to their advantage.

Mining Bitcoins

Bitcoin mining is done by an individual or an organization by combining records with mathematics. This happens when a Bitcoin is sent from one person to another and the process is recorded. These records sum up into a “block” and that’s when special computers with advanced software, known as “miners”, put these transactions in one enormous digital ledger. The blocks are collectively identified as a blockchain, which is a record that can be easily accessed and contains every transaction ever made by the individual or organization.

The use of powerful hardware, in conjunction with specialized software, make it possible to mine the blocks into code that is known as “hash.” This is a process that involves a significant amount of computational power with numerous “miners” working simultaneously on it. The newest generated hash is placed at the end of the relevant blockchain, which is then accordingly updated.

Warnings About Bitcoin

Since its inception, there have been a number of alerts with regard to Bitcoin.

First of all, since there is no bank that regulates the transactions on Bitcoin and the entire business is kind of untraceable and risky. There is no authority figure whatsoever to hold Bitcoin responsible for any sort of financial or other mishap.

Next, industry experts and enthusiasts believe that this is simply a phase that will pass, and the proverbial bubble will burst. Warren Buffet, iconic investor, said that Bitcoin is simply a mirage and anyone smart enough should stay away from it.

ADVANTAGES

Complete Anonymity

As Bitcoin transactions are completely discrete, a user’s personal information can never be exposed unless they personally publish or reveal their transactions.

Third-Parties Are Restricted

Authoritative entities such as banks or governments cannot interrupt Bitcoin user transactions or freeze Bitcoin accounts. This is an entirely peer to peer infrastructure.

Non-Taxable Purchases

There is absolutely zero sales tax levied on the purchases made with Bitcoin.

Low Transaction Fees

As Bitcoin transactions are made independent of any governing body like a bank, the transaction costs are next to nothing for international purchases or wire transfers.

Convenience of Mobile Payments

Purchasers can use Bitcoin anywhere with Internet access, which provides the ease of buying without going to a bank or store.

Reliable Security

Since users are in complete control of their transactional activities, it allows an extra level of security. Merchants cannot secretly charge additional fees, and the confidentiality surrounding personal information protects against identity theft.

Transparency

The aforementioned block chain allows everyone to see finalized transactions but hides personal information of the user. The public address is all that’s visible and anyone can carry out verifications within the Bitcoin block chain.

DISADVANTAGES

Needs More Awareness

Despite the fame, Bitcoin and other cryptocurrencies are still relatively unknown to many. There is a strong need for people to be educated about it to use it properly.

Real World Volatility

The ever-present volatility in Bitcoin functions is due to the fact that the number of coins is limited but the demand is always on a steep climb.

Transparency

Such privacy has made it easy for drug addicts and criminals to use Bitcoin to their advantage..

Conclusion

The future of Bitcoin is foggy and unclear, and although unregulated, countries like Australia and Japan have started putting up regulations for it. Bitcoin, with all its advantages and glamour, is still a very obscure and sometimes murky business. It is still open to interpretation and the future should tell us if its “advantages” outweigh the “challenges”.

Source Links:

http://money.cnn.com/infographic/technology/what-is-bitcoin/

http://www.wired.co.uk/article/bitcoin-101

https://www.cnet.com/how-to/what-is-bitcoin/

https://www.mirror.co.uk/tech/what-is-bitcoin-currency-crash-10409961

https://coinreport.net/coin-101/advantages-and-disadvantages-of-bitcoin/

https://www.investopedia.com/ask/answers/100314/what-are-advantages-paying-bitcoin.asp