Understanding Bitcoins, Cryptocurrency and Their Advantages
Bitcoin is a digital currency that is created as well as stored electronically. Unlike dollars or euros, they are not controlled by any party. They have no printed form, but are instead produced by businesses as well as individuals by way of software that works around mathematical problems.
Bitcoins and Cryptocurrencies
Bitcoin are the first in a developing category of money we call cryptocurrency. Gold or silver is the basis ofconventional currency. You know that if you put a dollar in the bank, you will get some gold in return, although is purely theoretical. However, bitcoins are based on mathematics and not on precious metals. In various places around the globe, people make use of software that follows a mathematical formula as part of the bitcoin production process. Because this mathematical formula is freely available, anybody will be able to can check it. The software itself is open source, indicating that everyone can do their part in ensuring that it does what it should.
Advantages over Traditional Currencies
Bitcoins can be used for making purchases electronically. In that sense, it’s the same as traditional currencies, which are also traded this way. However, there are many advantages of bitcoins, including:
The bitcoin network is not under any central authority. Each machine that mines bitcoins and processes transactions is a part of the network, and the machines all work together. Thus, in theory, no central authority can meddle with monetary policy and set off a meltdown – or just take bitcoins away from their owners. And even if a certain part of the network goes offline for whatever reason, the money will remain flowing.
Conventional banks can have too many and sometimes too inconvenient requirements before you can open a simple account. Opening a merchant account is just another tedious task made complicated by bureaucracy. In contrast, a bitcoin address can be set up in seconds, with zero fees and zero questions at that.
Bitcoin accounts are anynymous – sort of. You can have a lot of bitcoin addresses, and not one will be linked to your name, address or any other piece of information that could be traced to you. The bitcoin network, however, stores all details of each and every transaction you make in a massive digital ledger referred to as the blockchain. The blockchain contains everything. If you use your bitcoin address publicly, everyone can tell how many bitcoins that address holds. But they’ll have no idea it’s yours. There are a lot of things you can do to maintain your anonymity on the bitcoin network, like varying the bitcoin addresses you use and avoiding putting too many bitcoins into a single address.
Small International Transfer Fees
Transaction fees are negligible when compared to the charges made by banks for global money transfers.
Speed and Non-Repudiability
With bitcoins, you can send money wherever in the world and it will get there in a matter of minutes, provided the network is online. Lastly, it’s non-repudiable. After sending your bitcoins, you can’t recover them, except when the recipient sends them back your way.