Bitcoin; All You Need to Know written by: Briema Bitcoin is commonly referred to as digital currency. It is currency for the Internet in simple terms; and it employs a peer-to-peer payment system or network. The feature that makes it stand out is the fact that there are no banks or middlemen needed to execute payments in the network. Bitcoin has been referred to as the most outstanding triple entry bookkeeping system anywhere.
Creation of the bitcoin
Bitcoin has its origin from the concept called cryptocurrency. Although it was first described in 1998, it was officially published in 2009 by Satoshi Nakamoto as proof of the concept. Since then, developers have actively stayed with the idea to make it more popular today. This concept has been born from cryptography which controls all the transactions. In this regard, the initial creator made this software open source and every developer can adopt it and make their own adjustments for use. It is a concept that has been received in the market with great enthusiasm as more and more people seek to learn more about how it works.
Who controls it and how does it work?
The bitcoin idea is not owned by any individual and the people who use it around the world have the control. For it to work effectively, there must be consensus on the users so that the rules are put in place to comply with every aspect or element therein. Therefore, with a good structure and rules set in place by users, this software protocol will work efficiently. So how does it work exactly? It is really simple and just like having a mobile app or a computer program, the bitcoin system will allow you to have a personal wallet where you can send and receive bitcoins.
While transactions are being made, a lot is happening behind the scenes. A ledger which is called the ‘block chain’ will be shared publicly. This ledger is able to verify all the transactions and validate the authenticity through the aid of digital signatures. The signatures are created around the sending addresses and this will allow full control by users. This is the little detail behind cryptocurrency technology. So, who uses these bitcoins and are they really used by people?
Who uses bitcoin?
Many people use bitcoin even if it is a relatively new entrant. In fact more and more individuals and businesses are finding the merits of using bitcoin. Among others, apartments, law firms and restaurants are using it. When it comes to online services, WordPress, Reddit and NameCheap are the most popular who use this online currency. Bitcoins worth millions of dollars are being exchanged every day and this is growing.
How do you get bicoins?
You can receive the currency from payment of goods and services. You can also buy them from bitcoin exchange. Another way to get them is to exchange bitcoins with someone near you. Finally, you can get them through a process called mining. Mining is a reward system where bitcoin users earn points for more currency.
How a bitcoin payment is made
It is actually easier to make bitcoin payments compared to credit or debit card payments. This is because it takes a wallet application using your smartphone or computer. Just enter the recipients address as well as the amount then press send. To receive payment, you do not need to have a merchnat account.
The merits of using bitcoin
1. Freedom of payment
You have the freedom to send and receive the currency instantly no matter where you are in the world. The amount also does not matter. There are no borders or limits meaning that even during bank holidays, you will have all the freedom to conduct your business; there is full control.
2. Minimal fees
You can choose not to pay any fees at all while using bitcoin. However, you can pay a small fee and have your transaction processed much faster. Because of their ease and difference, bitcoin fees are much lower than Paypal or credit card companies. For merchants who help convert the bitcoin to flat currency and make deposits to actual bank accounts, the fee to this service is still the lowest.
3. Limited risks for merchants
The transactions are very secure and irreversible. They do not contain private customer information allowing many people to trade securely. As a matter of fact, there is no need for PCI compliance. Fraud is definitely nipped in the bud to the delight of many merchants.
4. Control and security
Using bitcoin is one of the best ways to avoid identity theft. This is a very strong element in transactions giving users more confidence to go about their businesses.
5. Full transparency and neutrality
In the block chain, all information regarding different transactions can be verified accordingly in real time. The bitcoin protocol cannot be manipulated and in this regard, the system is transparent, neutral and predictable.
The demerits of bitcoin
1. The penetration and use of this currency is still very low. In this regard, there is no large network which can bring forth additional merits.
2. Since this currency is new in the market, the value is subjected to volatility. In essence, people can only watch and observe how this start-up currency will fair and it will take time.
3. Because the development of the bitcoin system is still ongoing, there is no full guarantee. It is not a system that has fully matured because it is still in beta. In this regard, some people may want to see the end product before they are able to use it.
Other than this, bitcoin has come a long way and definietly has a promising future. It will be interesting to observe how it plays out in the market going forward.
Is bitcoin it legal?
It is worth noting that most jurisdictions have not passed any law to ban this currency. Some countries may observe this currency with caution which a few like Russia are very restrictive to any foreign currencies. All in all, most people in the world can use bitcoin; however, it is good to keep up with any variables that may come to play in the future in any jurisdiction. There are many other elements to talk about; but the above is an insight into the basics of bitcoin.