What is bitcoin ?
A Short Introduction to Bitcoin
In the past many difficulties and challenges were faced by people by trusting banks and government such as manipulation of fiat currency, wait in a long line to deposit and withdrawal, slow do cross border payments, lower security in banks etc
To put an end to this centralized system from 1980s continuous effort was made by different cryptographer, developers, software engineers to create a decentralized and transparent payment system which would be untraceable by the bank, the government, or a third party.Finally,in 2009 the first decentralized cryptocurrency, bitcoin, was created by pseudonymous developer Satoshi Nakamoto, in order to protect the value of the bitcoin system he created only 21 million bitcoins.It is not controlled or issued by any bank or government – instead it is an open network which is managed by its users,and the last bitcoin will be mined only on the year 2140.
Already 6 or 7 million bitcoins is lost from users due to not having the private key. the lost bitcoin cannot be recovered. There are 36 million millionaires in the world and it’s not possible for each of them to have 1 bitcoin even. However, as One Bitcoin has 8 decimal places, its 0.0000001 satoshi might be valuable in the future.Because it is limited (21 million bitcoins) to a finite amount that will ever be created it’s value will only continue to grow. With thousands and thousands of retailers accepting Bitcoin transactions today and more coming on board all the time this will only accelerate the skyrocketing value.
In June 2009 1 BTC was about 0.0001 USD If you are reading this article after 9 years from the date of invention of bitcoin in 2018,1 BTC is 6575$.
Below are some of the advantages of bitcoin
Anonymous and Private
Bitcoin transactions are completely anonymous and private. Unlike in payments through bank, where the transactions can be tracked and identified, bitcoin transactions cannot be identified. A person can only know the addresses of bitcoins on which the payment has been sent and received. But to whom these addresses belong cannot be identified. It’s like payment to a particular bank account can be tracked but to whom these accounts belong cannot be known. (but if a person uses same bitcoin address for every transaction for a long period of time, there is possibility that the person can be tracked). you can carry a billion dollars’ worth of Bitcoins on a memory stick in your pocket. You can’t do that with cash or even gold. Only 21 million bitcoins can ever be created in order to protect the value of the bitcoin system. Bitcoins can be ‘mined’, which is the process of actually creating bitcoins, or they can be bought using regular currency.
Bitcoins can be mined using computer software and a mathematical formula designed by the Bitcoin founder Satoshi Nakamoto.
Paying through bitcoins provide us utmost freedom. Bitcoins can be sent to any person in any part of the world. No intermediaries in between. No bank holidays/strikes. No boundaries or borders. No payment limit.
Purchases Are Not Taxed
Since there is no way for third parties to identify, track or intercept transactions that are denominated in Bitcoins, one of the major advantages of Bitcoin is that sales taxes are not added onto any purchases.
Paying through Bitcoin has very low and sometimes no transaction fees at all. It all depends on the priority of the person. If a person wishes that his/her transaction get’s processed fast, he has to pay a transaction fees which is still very low as compared to any financial intermediary or digital wallets.
Fewer risks for merchants
Bitcoin transactions are secure, irreversible, and does not contain any customers ‘sensitive or personal information. This protects merchants from losses caused by fraud or fraudulent chargebacks.
Bitcoin transactions are very fast if compared to banking channels. A bitcoin transaction is as fast an e-mail and can be processed within 10 minutes. Also it can be instantly processed if they are “zero-confirmation” transactions, meaning that the merchant takes on the risk of accepting a transaction that hasn’t yet been confirmed by the bitcoin blockchain. The confirmed transactions are those which takes 10 minutes to process. Credit Card or digital wallet services also provides instant approved transactions services but for this the merchants providing the services usually charges a hefty fees for it, which is not in the case of Bitcoin as mentioned above too. Bitcoin has very low transaction fees even for being super-fast in terms of processing.
Bitcoins Cannot be Stolen
Bitcoins’ ownership address can only be changed by the owner. No one can steal Bitcoins unless they have physical access to a user’s computer, and they send the bitcoins to their account. Unlike convential currency systems, where only a few authentication details are required to gain access to finances, this system requires physical access, which makes it much harder to steal.
People can’t steal your payment information from merchants
Perhaps this is a biggest advantage that Bitcoin has. Most online purchases today are made via credit cards, debit cards. requiring you to enter all your secret information (the credit card number, expiry date, and CSV number) into a web form This is why credit card numbers keep being stolen.
Bitcoin transactions, however, don’t require you to give up any secret information. Instead, they use two keys: a public key, and a private key. The public key, as the name suggests is public and anyone can see it (which is actually your bitcoin address), but your private key is secret. When you send a bitcoin, you ‘sign’ the transaction by combining your public and private keys together, and applying a mathematical function to them. This creates a certificate that proves the transaction came from you.
Perhaps, this is the reason why Bitcoin is called the Future of Money. Generally, the central government can get fiat currencies printed as much as they want. When the economy is slowing down it is not able to pay off it’s national debt, the government orders to print more currency and inject it into the economy. This causes the value of currency to decrease as more people have more currency. Also printing more notes creates inflation and increases the prices of commodity. It is because now more people is willing to pay for a particular commodity and the seller has to increase the price in order to make the sale. Thus, the person who had gained when government injected more currency can now buy more but those people who were not benefitted from have limited currency and now the prices of commodity has also increased.
On the other hand, this is not the case in Bitcoins. Only 21 million Bitcoins will ever be created and this is known to everyone. This means that after all the Bitcoins have matured, more number of bitcoins cannot grow and thus inflation won’t be a problem
MOST IMPORTANT. YOU OWN IT. BITCOIN! BE YOUR OWN BANK
There is no other electronic cash system in which your account isn’t owned by someone else. Take PayPal,Payza for example: if the company decides for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you. It is then up to you to jump through whatever hoops are necessary to get it cleared, so that you can access your funds. With cryptocurrency, you own the private key and the corresponding public key that makes up your cryptocurrency address. No one can take that away from you (unless you lose it yourself, or host it with a web-based wallet service that loses it for you). Bitcoin wallets have security as Swiss bank. It’s unbreakable plus Decentralized Bitcoin wallets are like having a Swiss-Bank account in your Pocket.