Bitcoin is a digital currency or a cryptocurrency that was launched in the year of 2009 by Satoshi Nakamoto.
Bitcoin is completely virtual; it is somewhat similar to an electronic form of currency. A user can use it to purchase goods and other services. However, only a few places accept Bitcoin and in addition to that, many nations have outright outlawed it. But at the same time, a few businesses have begun to see its expanding power.
One of such examples is, in October 2020 a very famous online payment service – Paypal, allowed their users to purchase four types of Crypto on their apps, which are Bitcoin, Ethereum (ETH), Litecoin, and Bitcoin Cash.
The main goal of a decentralized cryptocurrency, such as Bitcoin was to remove grant entities’ centralized control over money and ensure quick transaction processing.
Characteristics of Bitcoin
- Decentralized –
Bitcoin’s decentralization is its most important feature, the decentralization of Bitcoin offers a number of benefits over traditional currency including immunity from seizure, taxation, and theft. Additionally, Bitcoin’s decentralization enables more security and decreases the transaction fee which is being taken by banks or any other government entity, thus making money transactions untraceable.
- Transparency –
How much Bitcoin does a person possess cannot be known, however, everyone on the ledger board is aware of how many transactions have been done by any user and who has received it. As a result of which, the transaction is transparent to everyone.
- Emerging Technology –
In today’s world, when everything is shifting online, Bitcoin has become more predominant and considered an emerging technology. Even though it is not accepted worldwide and some countries have even made it illegal, but a number of people are trusting it and extensively investing in it.
The number of users investing or using Bitcoin is increasing every day, thus elucidating the impression that many people are willing to accept Bitcoin or any other cryptocurrency.
- Unvarying –
The value of a Bitcoin does not depend on Government and market conditions and since it is decentralized, the value only depends on the demand and nothing else. Therefore, it is unvarying in comparison to fiat or government-issued currency.
Pros and Cons of Bitcoin –
|Easily accessible and adaptable virtual currency
|Prices can come down as quickly as they rise up, which can lead to large losses
|Blockchain technology ensures the safety of its users
|Not backed up or regulated by any government body or bank, therefore, high chances of cyber hacking
|Offers transparency by making transactions constantly visible to everyone in the Bitcoin network
|Not reversible, and it does not provide refunds
|Significant potential returns can be expected, the prices fluctuate almost every day
|Not accepted worldwide and it is even banned in some countries
How does Bitcoin work?
The step-by-step procedure:
- The first step in this process is mining, the miners are responsible for creating Bitcoin with the help of their computer to solve mathematical functions. This exact process is responsible for verifying the transactions.
- Traditional trades are exchanged for Bitcoin that offers a way in and out of the market for non-miners.
- A person or any business create wallet that enables them to receive as well as send Bitcoin.
- Blockchain technology ensures that all the balances and transactions are safe and secure.