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Introduction to Bitcoins

Introduction to Bitcoins

In the recent years, different digital currencies have gained much popularity as decentralized exchange mediums that can be electronically created or stored. Though this concept is relatively new, the idea of digital currency is a few decades old. In the 1990s and 2000s, many organizations wanted to create electronically exchangeable currencies such as Flooz and DigiCash. However, these earliest forms of cryptocurrencies failed because of a series of issues such as inadequate technology, insufficient security features, shortfalls related to funding, and many others. Today, however, the digital currency has gained widespread acceptance and recognition, thanks to Bitcoin.

Created in 2009 by Satoshi Nakamoto, Bitcoin has now become a household name. The creator defines Bitcoin as “a purely peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution.”

While using traditional currencies, every online payment involves a third-party financial institution or bank for the validation of the transaction. Bitcoin allows individuals the freedom to make payments to different merchants or other individuals without involving any third-party. The transactions are validated by a system utilizing the blockchain.

The blockchain is nothing but a public ledger for the purpose of recording and publicly displaying every Bitcoin transaction carried out in the system. Blocks are the permanent records of the recently executed transactions. These recorded data blocks keep accumulating to build the blockchain containing all the records since the very first transaction using Bitcoin.

BITCOIN CAN BE OBTAINED IN FOUR DIFFERENT, SIMPLE WAYS:

Transactions

It is possible to receive bitcoins as the medium of payment for goods and services.

Digital currency exchange

Bitcoins can be bought and sold at the market rate.

Bitcoin ATMs

It is simple to purchase bitcoins from these ATMs by verifying the users’ Bitcoin wallet.

Mining

Bitcoin miners receive Bitcoin rewards for their service provided to the network.

Anyone looking to start using Bitcoin must set up a Bitcoin wallet for the safe storage and exchange of Bitcoins. Hot and cold are the two types of Bitcoin wallets available. A hot wallet remains online and allows instant online transfer. However, the cold wallets are offline, and the process of transaction is much longer and cumbersome.

LISTED BELOW ARE SOME OF THE MOST POPULAR APPLICATIONS OF BITCOIN:

PURCHASE GOODS AND SERVICES

TRADING

P2P TRANSFER

REMITTANCE

THE STEADY GROWTH IN THE POPULARITY OF BITCOIN CAN BE ATTRIBUTED TO THE FOLLOWING BENEFITS:

  • Cheaper and faster: Bitcoin transactions require less time compared to the traditional ones, and can take place at any time. The transaction fees are lower because there is no third-party involved.
  • Safe from manipulation: Bitcoin is beyond the control of any particular country or body. Moreover, the total number of Bitcoins that can be issued is 21 million, a finite figure. As a result, artificial manipulation of Bit coin supply is impossible.
  • Greater protection for the consumer: Individuals have complete control over the transfer, expenditure, and retrieval of their assets.
  • Higher Transparency: All transactions made through Bitcoin are traceable because the blockchain records them permanently.
  • Privacy and Security: Bitcoin transactions are inherently safe and secure because transactions can be made without any information related to personal identification. Moreover, the blockchain prevents fraudulent charges by monitoring the unique address of the coins.