Bitcoin (BTC) is a digital currency, which is used and distributed electronically.
Bitcoin is a decentralized peer-to-peer network. It is not controlled by a single institution or person.
Bitcoin also cannot be printed and its amount is very limited – only 21 million BTC is all that can be created.
Bitcoin was first introduced as open source software by an anonymous programmer, or group of programmers, under the pseudonym Satoshi Nakamoto in 2009. There have been a lot of rumors about the true identity of the creator of Bitcoin, but all the people mentioned in those rumors have publicly denied being Nakamoto.
Nakamoto himself had once claimed to be 37 years old and living in Japan. However, because of his proficient English and programs that have no description in Japanese, there are reasonable doubts about it. Around mid-2010, Nakamoto turned to other things, leaving Bitcoin in the hands of a few prominent members of the Bitcoin community. Satoshi also hired Gavin Andersen as lead developer.
It is estimated that Nakamoto owns about 1 million bitcoins, which are worth about $3.6 billion as of September 2017.
According to Gavin Andersen, the first thing he focused on after Nakamoto left the project was more decentralization. Andersen wanted Bitcoin to continue to exist independently, even if he "had an accident."
For many people, the main advantage of Bitcoin is its independence from banks, corporations and governments of the world. No single authority can interfere with Bitcoin transactions, charge transaction fees or seize people's money. Moreover, the Bitcoin movement is highly transparent – every transaction is stored in a distributed public ledger called blockchain.
Basically, while Bitcoin is not controlled as a network, it gives users full control over their funds.
The user only sees the amount of Bitcoin on his wallet and the results of transactions.
Behind the scenes, the Bitcoin network shares a public ledger called the "blockchain." This ledger contains every transaction processed at any time. The digital records of transactions are then merged into "blocks".
If someone tries to change only one letter or number in a set of transactions, it will also affect all subsequent blocks. Because it is a public ledger, any mistake or attempt to cheat can be easily monitored and corrected by anyone.
The user's wallet can validate each transaction. The authenticity of each transaction is also protected by digital signatures corresponding to the sending addresses.
Due to the verification process and depending on the trading platform, it may take a few minutes to complete Bitcoin transactions. The Bitcoin protocol is designed so that each block takes about 10 minutes to mine.
Bitcoin Properties
Decentralization
One of Satoshi Nakamoto's main goals when creating Bitcoin was the independence of the network from any governing authorities. It is designed so that every person, every company, as well as every machine involved in mining and transaction verification, becomes part of a vast network. Moreover, even if one part of the network fails, the money will continue to move.
Anonymity
These days banks know almost everything about their customers: credit history, addresses, phone numbers, spending habits, etc. And all of this is quite different with Bitcoin, since the wallet doesn't have to be tied to any personally identifiable information. While some people simply do not want their money to be censored and tracked by any kind of authority, others may argue that drug trafficking, terrorism, and other illicit and dangerous activities will flourish in this relative disclosure of identity.
Transparency
Bitcoin's anonymity is only relative, as every Bitcoin transaction ever made is stored on the blockchain. In theory, if your wallet address is openly used, anyone can know how much money there is by carefully studying the blockchain ledger. However, tracing someone's specific bitcoin address remains almost impossible.
And those who wish to remain anonymous with their transactions can take measures to remain undetected. There are certain types of wallets that prioritize obfuscation and security, but the simplest measure would be to use multiple addresses and not transfer huge amounts of money to a single wallet.
Speed in transactions
The Bitcoin network processes payments almost instantly, usually taking only a few minutes for someone on the other side of the world to receive money, while regular bank transfers can take several days.
Irreversibility
Once you send Bitcoin to someone, there is no way to get it back, unless the recipient wants to send it back to you. This ensures that payment will be received, which means that whoever you trade with cannot defraud you by pretending that they have not received the money.
What can I buy with Bitcoin?
In 2009, when Bitcoin was first introduced, it wasn't very clear how and where it could be spent. But now, you can buy almost everything with it. For example, giants such as Microsoft and Dell accept payments in the form of Bitcoin for a variety of their products and digital content. You can fly with airlines like Airbaltec and Air Lithuania, buy theatre tickets through Theatre Direct in the UK or get some bottles of beer from Unst Pro, and much more.
Other options include paying for hotels and buying real estate, getting bills at various bars and restaurants, joining a dating site, buying a gift card, placing a bet at an online casino and donating to a cause that supports it. There is also a wave of diverse online marketplaces, trading in everything from illicit items to high-end luxury items.
Bitcoin is a relatively new and very complex method of payment, so naturally the spending options are still limited, but every day more and more businesses – from small local cafes to industry giants – are accepting payments in the form of Bitcoin.
Moreover, due to the constant volatility of the exchange rate, Bitcoin has become a major investment opportunity. Although it remains unstable and to some extent an unrecognized currency, it has become twenty times more valuable over the past year, reaching $20,000 per bitcoin coin.
How to get Bitcoin?
The simplest way to get Bitcoin is to buy it. Bitcoin is available from various exchanges, but you can also buy it directly from others across the markets. You can pay for it in cash, through credit and debit card transfers, or even for other digital currencies. But first, you'll need a Bitcoin wallet.
There are a variety of options, but the main ones can be selected in the online wallet and portfolio software on your computer's hard drive. Neither option is completely secure, as the hard drive can become damaged, while an online wallet may be vulnerable to hacking. There are also mobile wallets, which are very simplified due to the enormous storage capacity needed to carry the entire blockchain; there are dedicated devices called wallets along with paper wallets with two QR codes that are not digitally stored anywhere, making them safe from normal cyberattacks and hardware failures.
And, of course, there is mining. A few years ago, anyone with a powerful enough computer could mine Bitcoin, but that's not the case anymore. The growing increase in Bitcoin prices as well as its exchange rate has caused large companies to join the arena armed with mining hardware, which is why the level of difficulty and energy required to mine a valuable amount of Bitcoin has increased. What's more, the amount of Bitcoin that has not yet been mined is constantly and drastically declining.
Bitcoin Features
- Freedom
- High portability
- Commission selection
- No payment cards
- Safety & Control
- Transparency and impartiality
- It cannot be faked
Freedom
Bitcoin is designed with freedom in mind. Most importantly, freedom from the ruling authorities that control transactions, impose fees and control people's money. When it comes to buying things, cryptocurrencies have become just as legitimate as fiat currency in recent years, and given that there are many deep markets on the web that only accept Bitcoin, you may be able to buy some things easier with Bitcoin than with any other currency.
High portability
One of the outstanding characteristics of money is portability, meaning that it should be easy to carry and use. Since Bitcoin is completely digital, in currency terms any amount of money can be carried onto a fast drive or even stored online.
Cryptocurrencies give people the freedom to send and receive money by simply scanning a QR code or a click of an online wallet. It takes little or no time, there are no exorbitant fees and money goes from one person to another without any unnecessary intermediary; all you need is an internet connection.
Commission selection
Another indisputable advantage of the Bitcoin network is the possibility of choosing the amount of the transaction fee, or choosing not to pay it at all. The transaction fee is received by the miner, after creating a new block with a successful hash. The fee is usually paid in full by the sender, while deducting this fee from the recipient can be considered an incomplete payment.
Transaction fees are entirely voluntary and serve as an incentive for miners to ensure that the special transaction is included in the new block generated. This incentive also acts as a source of income for miners, often offering them more money than traditional mining, especially given that mining activity will come to a complete halt in the future, when the maximum amount of bitcoins is reached.
Thus, the cryptocurrency market asks users to choose between cost and waiting time. Higher transaction fees may mean faster processing, while users without any time constraints can save money.
No payment cards
Payment cards are credit, debit, prepaid, e-wallets, ATMs, POS cards and associated companies. It consists of all organizations that store, process and transmit cardholder data, and there are strict security regulations in place and most major card brands are part of it.
While uniform rules and regulations can be good for large corporations, they may not take everyone's needs into account. When using Bitcoin, there is no need to comply with the standards of the payment card industry, which can allow users to expand into new markets, where credit cards are unavailable or fraud levels are unacceptably high.
As a result, users receive lower commissions, along with the opportunity to expand their markets and reduce their administrative expenses.
Safety & Control
Bitcoin users are able to control their transactions; no one can withdraw money from your account without your knowledge and consent, as sometimes happens with other payment methods, and no one can steal your salary information from merchants.
Bitcoin users can also protect their funds with backups and encryption. Furthermore, their identities and personal information are always protected, as they are not required to be disclosed to make any payments.
Transparency and impartiality
Every single transaction as well as every single bit of information about it is always available to everyone in the blockchain network, which can be verified and used in real time. The Bitcoin protocol is encrypted, so no human or organization can control or manipulate it. The network is also decentralized, so no one can ever fully control it. That is why Bitcoin will always be neutral, transparent and predictable.
It cannot be faked
One of the most popular methods of counterfeiting in the digital world is to use the same money twice, making both transactions fake. This is called "double spending." To counter this, Bitcoin, just like most other cryptocurrencies, uses blockchain technology as well as the various consensus mechanisms built into all Bitcoin algorithms.
Negatives
- Legal issues
- Acceptance Level
- Lost keys
- Volatility
- Continuous development
Legal issues
Bitcoin's legal status varies greatly from country to country. In some countries, the use and circulation of Bitcoin is encouraged, while in others its use is prohibited and prohibited by law.
There have been a lot of concerns about Bitcoin's attraction to criminals, and some media outlets have even reported that its popularity is entirely due to the ability to spend it on illicit goods. And indeed when the infamous Silk Road black market closed, Bitcoin immediately fell in value.
Acceptance Level
Bitcoin is accepted and is completely legal in a lot of countries, but some governments in the world still do not have any regulations regarding the regulation of Bitcoin, while others have banned it outright.
The majority of commercial companies, no matter how large or small, remain completely obscure. And it is almost impossible to give up all other currencies and start using Bitcoin exclusively.
Lost keys
The key is a unique alphanumeric password necessary to access a Bitcoin wallet. Losing this key mainly means losing your wallet. However, most existing wallets have backup and restore mechanisms, but the user needs to set them up before being able to use them.
Volatility
The price of Bitcoin has suffered from swinging up and down, going through various cycles of massive hikes and then falls, which some refer to as bubbles and depressions. Throughout its history, Bitcoin has managed to set new record highs, only to fall dramatically immediately afterwards. Their value is also unpredictable, and they change rapidly and dramatically, which can cause significant financial damage to any mindless investor.
Continuous development
The future of Bitcoin is somewhat unclear. Currently, governments and banks are unable to control Bitcoin, and it is considered virtually unregulated. However, as it grows and becomes more popular, more governments in the world are trying to bring it under control. However, regulated and governed Bitcoin will be a completely different type of currency.
Disclaimer and Risk Warning:
This content is provided to you "as is" for general information purposes only, without any representations or warranties of any kind. It should not be construed as financial advice, nor is it intended to recommend the purchase of any particular product or service. You should seek expert advice from professional consultants.
