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What is Bitcoin And It’s Uses

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Bitcoin: A Form Of Currency You Don’t Afford to Miss

Bitcoin is a type of digitally encrypted currency. In this a record of transactions are maintained and new units of currency are generated by the computational solution of complex mathematical problems. However, this operates independently of a central bank.

To cut through some of the confusion surrounding crypto currency bitcoin, we need to separate Bitcoin into two components. On the one hand, we have bitcoin token, a snippet of code that represents ownership of a digital concept startup – sort of like a virtual IOU. On the other hand, we have bitcoin-the-protocol, a distributed network that maintains a book of financial accounts of balances of bitcoin-the-token. Both refers to “bitcoin.”

The system enables payments to send between users without passing through a central authority, such as a bank or any payment gateway. This is to create and  electronically. Bitcoins aren’t printed, like Euros or Dollars – they’re produced by computers all around the world, using high end software.

It was the very first example of what we today call crypto currencies, a growing asset class that shares some characteristics of traditional currencies, with verification based on cryptography.

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Who created bitcoin?

A software developer known by the name of Satoshi Nakamoto proposed bitcoin in 2008, as an electronic payment gateway system based on some mathematical proof. The idea was to produce a means secured and faster exchange of money, independent of any central authority. This can transfer electronically in a verifiable, secure and immutable way.

To this day, no-one knows who Satoshi Nakamoto really is but everyone considers him to be the inventor of Bitcoin.

How Is Bitcoin Different From Traditional Currencies?

Decentralization

One of the most important features of Bitcoin is that it is a decentralized currency system. No institution or authority controls the Bitcoin network. This new currency system maintains a group of coders and run with an open source network spread all around the world. This is ideal for group of individuals who are uncomfortable with the control that government or banks authorities have over their money.

It also solves double spending problems of digital currencies through a creative combination of cryptography and economic incentives. In electronic fiat currencies, this specific function is fulfilled by the financial institute, giving them control over the conventional system. With this currency system, the maintain integrity of transactions with an open and distributed network. This may own by no entity or individual person.

Limited supply

All traditional currencies such as Dollar, Euros, Yen, etc. has an boundless supply. The central bank or government authorities can issue new currency as per the need. It can control the currency value according to other currencies. This is completely different from traditional currency. An underlying steps and process tightly controls the supply of Bitcoin. A small number of Bitcoins flows out every hour. This speed will lessen over time till the high reach of 21 million units. This makes it very attractive as an asset. Theoretically, if supply remains the same and demand grows, the value of currency will increase.

Pseudonymity

Traditional electronic payments senders are identified by central authority, but users of Bitcoin is not under surveillance as it is a semi-anonymity as there is no central valuation. For digital currency users there is no need to identify themselves while sending to another user. This system doesn’t need to know the user identity. In reality, each user is generally identifies only by his /her wallet address. Here, the transactions can track in the above manner. Law of enforcement authorities have also developed several methods to identify users.

Immutability

Unlike electronic command transactions, Bitcoin transactions can’t be undone. As there is no central judge, who can approve the returning or refunding of money. If a transaction is recorded on the network, it is impossible to modify it. This may bother some people, but you have to be careful and have to make sure while sending Bitcoins as you can’t reverse the transaction.

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Why use bitcoin

Bitcoin is an alternative, decentralize payment method gateway. Unlike international bank transfers, the cost is very low, and almost immediate transactions. This mainly benefit’s for merchant’s and the process is unable to undone. This helps in removing the threat of expensive charge-backs.

However, the advancement in domestic payment gateway methods and the very rapid development of other similar cryptocurrency. This results in large reduce in it’s advantages in this area. Especially, this provides increasing fees and frequent network traffic-jams.

Furthermore, the regulation and strictness are increasing to prevent illegal transactions. The money laundering restrict’s the use of cryptocurrency for privacy reasons.

In some parts of the world, bitcoin is still a more efficient and cheaper way of transferring money across borders. Hence, several startups make use of this feature. It’s price and speed advantages are as traditional channels to improve their payment gateways. The network’s fees continue to increase, and liquidity remains a problem in many countries.

 

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