Bitcoin – a new currency that appeared in 2009 – created by a man under the alias Satoshi Nakamoto. Bitcoin is a revolutionary currency that totally changes the rules of the “money game”. Let’s take a look at a few of its perks:
Transactions are made without a middleman that means without banks.
You can use bitcoin to book hotels, shop online and even buy a house.
Besides all these, people are more interested in bitcoin because they think they can become rich overnight (Bitcoin is mostly based on hype). And that might be actually possible considering that Bitcoin price hit the roof in 2017.
The team from assignment masters managed to prepare a list of facts regarding Bitcoin and its use:
What Makes Bitcoin Different From Other Currencies?
Bitcoin is a cryptocurrency that can be used to buy things via World Wide Web. It’s true that you can buy stuff online with dollars or euros too. However, that’s not what makes bitcoin unique and important.
One of the most important aspects of Bitcoin is that it’s decentralized. No one controls bitcoin. So, you may chill out, no bank will play with your money. Your bitcoins are safe, until some hacker steals it from you. But that’s a story for another day.
Who Prints Bitcoins?
Bitcoin is not a physical currency, therefore, it can’t be printed like dollars and euros. The government can’t touch it, and it definitely can’t make rules regarding its use. So you may rest assured, for now. Banks can usually create as many dollars as they want and use them to cover the national debt – even if they are creating a new one when printing money without something to back it up.
However, Bitcoin is a digital currency, created by a community that anyone can join at any time. So, how does one get Bitcoins?
There are two ways you can do this.
You can buy them from other people or you can mine them yourself. In order to mine bitcoin, you need a powerful computer capable of using a lot of resources. You are using computer power to generate bitcoin in a distributed network. The same network processes the transactions. So, it’s like you were being paid for processing transactions.
Yea, I didn’t understand the process either. But that’s ok, you don’t need to know all the details. However, you should know that in order to mine bitcoin you need a really expensive setup. You need to invest at least a few thousands if you want to start mining bitcoins efficiently.
Can You Create Unlimited Bitcoins?
You can’t. The Bitcoin protocol tells us that no more than 21 million bitcoins can be ever generated by miners. Nevertheless, bitcoins can be divided into smaller coins, called ‘Satoshi’, after the guy that invented bitcoin.
What is Bitcoin Based On?
Even if that’s not really true in the United States or in some other countries, conventional currencies are said to be based on gold and silver. So, normally if you would hand over a dollar at the bank you should get in return gold or silver (this doesn’t work in practice). Bitcoin, on the other hand, is not backed by gold or silver, but is based on mathematics.
You may use software that are based on a mathematical formula to produce your own bitcoins. Anyone can access this mathematical formula free of charge. More than that, the software is open source, so anyone can check it out to see if it does what it supposed to do.
How You Store Your Bitcoin?
So before being able to own bitcoins, you must create a “digital wallet”. Your wallet can reside in the cloud or on your PC or smartphone. If your wallet is kept in the cloud it can be hacked, there were cases when companies fled with its client’s bitcoins. If your wallet is kept on your PC/smartphone you can accidentally delete it or a virus can destroy it. I don’t want to scare you, I just want to make you aware of the dangers.
A digital wallet is like a bank account that lets you pay for stuff online, send, and receive money from anyone, anytime. The bad part is that your wallet can’t be insured, unlike a bank account.
Let’s take a look at some important bitcoin features:
1. Its Decentralized
This means that the Bitcoin network isn’t and couldn’t be controlled by any authority, like the Government or banks. Each machine works independently to mine and process transactions, but it’s all part of the network, meaning that they work together. You can understand it better if you think about a human body with all its organs that work together for the well-being of the entire body.
2. Extremely Easy to Set Up
Banks usually put you through a lot of effort in order to open a bank account. That’s totally different when it comes to Bitcoin. Just set up a Bitcoin address (which shouldn’t take more than 2 minutes) and you’re done. There are no fees and no other questions asked. Easy, isn’t it?
3. Its Anonymous
Well, almost anonymous. You may hold several Bitcoin addresses which aren’t linked to your name or any other personal information. However, I wouldn’t recommend you to start buying stuff from the deep web with Bitcoins. They are traceable!
4. Its Transparent
If you have made a transaction using one of your bitcoin addresses, anybody will know how many Bitcoins are stashed at that address – even if they can’t know who those Bitcoins belong to.
5. Transaction Fees are Inexistent
There are banks that can charge you more than $10 for an international transfer. Bitcoin does not!
6. It’s Fast
Sending Bitcoin anywhere in the world is quick and easy. It will take at most a few minutes until they arrive.
7. Bitcoins are Non-Repudiable
Be careful as once your bitcoins are sent, there is no way back. If the person you sent them to doesn’t want to return it to you, they are gone forever!
Bitcoin might be an excellent investment, but not for long! No one can know what will become of Bitcoin. As you can see, it’s not regulated by any authority, and that might change pretty soon. However, Bitcoin is an eye-opening innovation, showing us that a currency doesn’t have to be centralized in order to work.