Bitcoin, what is it and what is it for? These are some of the questions most often asked by Google in recent months.
The rise of this electronic currency and its peculiar characteristics attract the attention of investors and companies, who are considering doing business with the support of Blockchain. The dark side of Bitcoin, however, drives away some of them, making us all question whether there will be a future in crypto currencies.
Bitcoin: what it is and what it’s for
Bitcoin is a digital coin created in 2009 by a mysterious figure using the alias Satoshi Nakamoto. It can be used to buy or sell items from people and companies that accept bitcoins as payment, but it is quite different from traditional currencies, mainly because it does not exist as a physical currency. There are no real coins or banknotes. It only exists online says Coinspent.com
Real-world” currencies, such as the euro, are managed by a central bank such as the one that manages the money supply to keep prices constant.
They can print more money or withdraw something from circulation if they think it is necessary, as well as use other monetary policy controls, such as adjusting interest rates.
But Bitcoin does not have a central bank and is not linked or regulated by any state.
This is one of the doubts that must first be cleared up by asking “Bitcoin, what is it and what is it for?” since it is important to be clear that the supply of cryptomoneda is decentralized and can only be increased through a process known as “mining”.
For every bitcoin transaction, a computer owned by a bitcoin “miner” must solve a difficult mathematical problem. The miner receives a fraction of bitcoin as a reward.
Thus, a record of each transaction is stored in a public book known as blockchain, using anonymous strings of numbers to identify it. This ensures the integrity of the currency.
We can now answer the question “Bitcoin, what is it? But what is it for?
The system can act as a payment network that has no downtime, operates 24 hours a day, 7 days a week, no matter where and to whom the money is sent. The uses are varied:
Bitcoins can be used to buy anonymously.
Bitcoins offer an alternative way to make a profit. There are those who use their computer equipment to solve difficult mathematical questions and puzzles (this is how bitcoins are created).
With bitcoins you can save money, like a bank account, by bridging differences.
Why is the value of bitcoin increasing?
Like all assets or currencies, the price of bitcoin is determined by the amount people are willing to pay for it. Whether that is the “right” valuation, and whether Bitcoin is really worth that amount or not, is largely a matter of opinion.
Speculation has fueled Bitcoin’s rapid rise. However, one cannot be certain that money will be made by investing in this cryptomoneda. You have to be aware of the risk, as in any other form of investment.
The anonymity of bitcoin makes some people who understand bitcoin and know what it is and what it is for consider using it for illicit activities.
The advantage for them is that their personal data would never be exposed, only their wallet IDs. For this reason, it is the currency most sought after by those who carry out activities outside the law. This trend may run counter to the future development of the crypto currency market.
What are the advantages of Bitcoin?
1. Freedom to send and receive payments
With Bitcoin you can send and receive money from anywhere in the world and at any time just with your phone or your computer.
There are no timetables, no borders, no commissions or taxes (there are only small fees if you want your coins to arrive earlier). Using Bitcoin you have total control of your money.
2. Fewer payment risks
Operations with Bitcoins are secure, irreversible, and never send personal or private data of users.
This will protect you especially if you have an online sales business, as buyers will not be able to scam you by saying that they have not received their orders or by making fraudulent returns.
3. There is more security and control
Bitcoin users are the ones who have total control over their operations; therefore, it is impossible for possible fraudsters to force unwanted charges such as for example can happen with a normal bank account.
Payments on this network can be made without being associated with personal information. This provides a high level of protection against identity theft, for example.
4. It is a neutral and transparent system
All the information of the Bitcoin network can be seen by any of its users as it is available in the chain of blocks.
No person or public or private institution can manipulate the Bitcoin protocol because it is encrypted to make it completely secure.
And their disadvantages?
1. It’s a little-known system
There are still many people who don’t know about Bitcoins, or if they’ve heard of this network, they’ve never used it.
It is true that there are even already physical businesses that allow you to pay in their stores with Bitcoins, but total users are still a relatively small group.
2. The price is somewhat unstable
Being a currency that many people do not yet know or use, any relatively small event that happens affects the price of Bitcoin.
In theory, this instability will decrease when the Bitcoin technology matures, and there are more users using this system.
What commissions are paid for using Bitcoins?
Most transactions with Bitcoins can be done without any commissions (unlike banks, which will always charge you a percentage for any movement you make in your account).
However, users are encouraged to pay a small voluntary commission so that transaction confirmations are made more quickly.
These percentages are very small, and only a few cents are charged for each transaction made.
Commissions are used as protection against users who try to send a large number of transactions to overload the network, and also to prevent fraudulent operations such as money laundering.
Bitcoins have been a revolution all over the world due to the very special characteristics they have (above all because they are not controlled by any type of bank or government).
But what is most interesting about this virtual currency is that it has become the simplest method for paying and making purchases in countries with economic difficulties such as Venezuela.
What do you think about this new form of money? Have you tried Bitcoins yet? Leave me a comment below and tell me what you think.