This article will explain what is Bitcoin and how it is changing today’s business world.
What is Bitcoin?
Bitcoin is a cryptocurrency and a payment system invented by an unidentified programmer, or group of programmers, under the name of Satoshi Nakamoto.
- Bitcoin is a form of digital currency, created and held electronically.
- It is decentralized. No single institution controls the bitcoin network
- Bitcoins aren’t printed, like dollars or euros – they’re produced by people, running computers all around the world, using software that solves mathematical problems.
- It’s the first example of a growing category of money known as cryptocurrency.
What is cryptocurrency?
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency.
Why should you go for bitcoins?
Bitcoins can be used to buy merchandise anonymously. You can make international payment easily. All the payments are cheap because bitcoins are not tied to any country or subjected to any rules or regulations. If you own small business, bitcoin could be beneficial for you since it doesn’t include any credit card fees.
What makes Bitcoin different from normal currencies?
Bitcoin can be used to buy things electronically. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally.
But bitcoins are a completely decentralized form of money. Unlike dollar, pounds or rupees, bitcoins are not backed by any government; not linked to any sort of central banking system or issuing authority.
Who created Bitcoin?
Bitcoin was created by Satoshi Nakamoto, who published the invention on 31 October 2008 in a research paper called “”Bitcoin: A Peer-to-Peer Electronic Cash System””. There have been various claims and speculation concerning the identity of Nakamoto, none of which are confirmed.
How Bitcoin works
As a new bitcoin user first, you need to install Bitcoin wallet on your computer or smartphone or tablet. The wallet is a kind of virtual bank account that allows you to send and receive bitcoins, pay for goods and also to save money.
Once you have installed, it will generate your first Bitcoin address. Then you can disclose your address to your friends in order to make the payment with them and vice versa.
Through bitcoins, you can shop at your favorite shopping mall, subscribe to an online dating service, buy pizza, food coupons and almost everything you want.
In short, you can use bitcoins for all sorts of transactions.
Who prints Bitcoin?
No one. This currency isn’t physically printed in the shadows by a central bank, unaccountable to the population, and making its own rules. Those banks can simply produce more money to cover the national debt, thus devaluing their currency.
Instead, bitcoin is created digitally, by a community of people that anyone can join. Bitcoins are ‘mined’, using computing power in a distributed network.
This network also processes transactions made with the virtual currency, effectively making bitcoin its own payment network.
What are the characteristics of Bitcoin?
Bitcoin has several important features that set it apart from government-backed currencies.
Transaction fees are miniscule
Your bank may charge you a $10 fee for international transfers. Bitcoin doesn’t.
The bitcoin network isn’t controlled by one central authority. Every machine that mines bitcoin and processes transactions makes up a part of the network, and the machines work together. That means that, in theory, one central authority can’t tinker with monetary policy and cause a meltdown – or simply decide to take people’s bitcoins away from them. And if some part of the network goes offline for some reason, the money keeps on flowing.
It’s easy to set up
Conventional banks make you jump through hoops simply to open a bank account. Setting up merchant accounts for payment is another complicated task, beset by bureaucracy. However, you can set up a bitcoin address in seconds, no questions asked, and with no fees payable.
It is kind of anonymous. Users can hold multiple bitcoin addresses, and they aren’t linked to names, addresses, or other personally identifying information. However it is completely transparent
It’s completely transparent
Bitcoin stores details of every single transaction that ever happened in the network in a huge version of a general ledger, called the blockchain. The blockchain tells all.
If you have a publicly used bitcoin address, anyone can tell how many bitcoins are stored at that address. They just don’t know that it’s yours.
You can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment.