Bitcoin can be defined as a form of electronic money or a decentralized digital currency. It does not have any central monetary authority, but instead, a peer-to-peer computer network tracks all Bitcoin transactions and creates additional currencies through a complicated process known as mining.
Bitcoin was created in 2009 by a mysterious individual known as Satoshi Nakamoto, in the wake of a global financial crisis. Occupy Wall Street accused banking institutions of mishandling public funds, duping clients, charging exorbitant fees, and rigging the system; hence, the pioneers of cryptocurrency wanted to have the seller in charge and to eliminate the middleman entirely. They felt there was a need to cancel all interest fees, make transparent transactions, cut costs, and to create organic network value.
To learn more about the revolutionary development, here is everything you need to know about Bitcoin, and what the future holds.
Is Bitcoin secure?
The strength behind Bitcoin being revolutionary is the use of blockchain technology that solves the big problem around building trust in digital data. Everyone within the established network commands equal public ledger on their computer. What happens is that when a Bitcoin is spent, a miner solves a complex maths sum using their computer and adds the changes onto the ledger. The change is only made when other miners agree.
If a collective agreement is not reached within the network about the validity of a new block, it is rejected to protect the system against hacking. This consensus method or blockchain technology has got developers excited, as it could be used in the future for storing identity information, and other vital data that could be targeted for attacks.
How to earn Bitcoin
A miner gets paid for their computing power with Bitcoins, and this is how new digital coins are admitted into the network. The rewarding procedure for creating a block and adding it to the chain keeps halving at regular intervals. The maximum number of Bitcoins was designed to be 21 million, meaning the figure cannot be attained until the year 2140, thanks to the halving process.
Using Bitcoin is not as complicated as most people have been made to think. A digital “Wallet,” which is a method of storing private keys referencing coins, is used to store Bitcoin. They can be hardware or software-based, but most importantly, they are secure, and people across the globe can use exchanges to trade their coins using fiat currencies or other cryptocurrencies.
Trading in Bitcoin
To trade in Bitcoin, people use addresses in the same way people use e-mail addresses to convey digital messages around the world. Usually, it involves a string of indecipherable numbers and letters, but some wallets offer scannable QR codes that users can scan via their smartphones.
One significant advantage of Bitcoin is that you can trade in any value of Bitcoin. Unlike fiat currencies which are divisible by 100 and pennies, people can buy Bitcoin in any size.
The business impact of Bitcoin
Due to the numerous advantages of Bitcoin and cryptocurrency in general, new business models have been put in place.
Unlike credit cards that are susceptible to frauds, Bitcoin works the same for everyone around the world. Exchanging the coin offers the recipient a great piece of mind in the sense that once a transaction has been completed, it cannot be reversed.
Bitcoin is currently being accepted in several industries as a form of payment; for example, Microsoft’s online store accepts Bitcoin, while you can make donations using cryptocurrency to Wikipedia. These are just examples, there are more doing the same, and it is widely expected that soon, Bitcoin will be deep into the mainstream.