Introduction to Bitcoin
Bitcoin is an ingenious payment network and is a new type of money. It is the first invented cryptocurrency- a digital asset. It is protected with the help of cryptography and can be exchanged as currency. Bitcoin utilizes P2P technology and is operated without any central authority or banks. It manages the transactions and issues bitcoin through the network. It is being accepted worldwide. Bitcoin is open-source that is design for public i.e., No person owns or governs the Bitcoin. Every person can participate in these transactions.
What is Bitcoin?
Bitcoin is a first decentralized digital currency. As the Bitcoin network is peer-to-peer and the transactions take place between users directly without an intermediate. The transactions are verified by network nodes through the use of cryptography. Bitcoin utilizes the blockchain technology and network nodes are recorded in a public distributed ledger called “blockchain”. Bitcoin is invented by anonymous person or group of people under the name title “Satoshi Nakamoto”. It is released as open-source software in 2009.
Bitcoin was designed to create a “new electronic cash system”. It is absolutely decentralized without a server or central authority. Bitcoin is rapidly exploring in the universe and people are simultaneously investing in the same. It aims to give decisive information hub for beginners and industry. Bitcoin is created as a reward for a process called as mining. Furthermore, Bitcoin is used as currency for purchasing goods and services.
- The word “Bitcoin” was first seen and defined in the whitepaper that was published on 31 October 2008. It is the combination of 2 words “bit” and “coin”. The ticket symbols of bitcoin are BTC and XBRT.
- The domain name “bitcoin.org” was registered on 18th August 2008. These coins are created by computers which solve a set of complex mathematical problems. The users can buy bitcoin and conduct transactions for spending them. The exchanges take place by a San Francisco-based “Coinbase”.
- Satoshi Nakamoto titled Bitcoin as “peer-to-peer electronic cash system”; it was also posted in the mailing list. Nakamoto enabled the bitcoin software as open source code and was launched in January 2009 on SourceForge.
- Finally, in January 2009, Satoshi Nakamoto mined the first ever block on the chain and bitcoin network came into existence. This is called as “block genesis”.
- As moving on further, in the year 2013 Bitcoin reached $1,000 for the first time and within no time the price rapidly declined. The investors who had invested in Bitcoin suffered a greater loss in that period as the price drops down to $300
- As the currency was designed by an unknown person, Bitcoin attracted many crooks to play their foul game. In the year 2014, Mt.Gox world’s largest Bitcoin exchange went offline and the owners of Bitcoin lost their currencies.
- The revolutionary period of cryptocurrency begins in the year 2016 when the Ethereum platform was introduced. This platform utilizes Ether to facilitate blockchain-based smart contracts and apps. The arrival of Ethereum gave rise to Initial Coin Offerings (ICO’s). The fundraising platform offers investors the chance to trade with essential stocks or share in startup ventures.
- There was a gradual increase in Bitcoin growth. In the year 2017, Bitcoin becomes crystal and clear, as many investors started investing in it. As stated Banks like Barclays, Citi Bank, Deutsche Bank and BNP Paribas began investing in Bitcoin. The technology behind Bitcoin “blockchain” also started exploring the era.
Advantages of Bitcoin
As we all are aware of the bitcoin and its uses. There are many web services that have started accepted payments in the form of Bitcoin. As of now physical forms of Bitcoin exist, the primary form of currency is data which is stored online. Bitcoin can be obtained by trading money, goods or services with people who have Bitcoin or through mining process.
- User Anonymity: The bitcoin purchases are discrete. The user remains anonymous until he publishes his Bitcoin transactions. The purchasers or transactions are never linked with his personal identity. The Bitcoin address which is generated for user purchases changes with every transaction. It is highly impossible to trace the transactions.
- No Third-Party interruptions: Bitcoin is decentralized, which is not controlled by governments, banks, and other financial institutions. All the transactions are peer-to-peer and the data is stored online.
- Tax-Free: As there is no third party to identify, Bitcoin is tax fee. It doesn’t tax on purchasing the goods and services.
- Low Transactions Fees: As all the standard wire transfers and foreign purchases involve high fees and exchange costs, Bitcoin charges low fees. The bitcoin is decentralized platform and the costs of transacting are low. This is a major advantage for travelers who roam around the world.
- Mobile Payments: Bitcoin is a kind of online payment system; the users can pay for their coins with the Internet access. The purchasers can undergo the transactions online. Even the personal information of the user is not required for the transactions.
- Fewer risks for merchants: As the bitcoin transactions cannot carry their personal information, they cannot be reversed. The transactions are secure and merchants are preserved from potential losses which might take place due to fraudulent activities.
Criticism on Bitcoin
In spite of above-described advantages, bitcoin has faced a lot of criticized by several economists and tycoons. It is sometimes, difficult to predict the future of Bitcoin. As it is new to the sphere, many investors have fear to trade with Bitcoin. This might be because human mind hesitates to accept new technology or many feel that Bitcoin is fake as the transacting person’s information is not revealed.
As stated, few bankers have said the cryptocurrency is a bubble and it will crush by the government. Crypto experts have thoroughly examined the critiques and revealed that blockchain technology can’t be imperiled by government and future use-cases justify its current value.
- Bestowing to PayPal’s website, a bank transaction in Paypal takes one business day, but the bitcoin transactions take place under 30 minutes
- Numerous countries from the US to South Korea are ramping the efforts to impose restrictions on the Wild West of cryptocurrencies.
- Robert Shillers, a Nobel Prize winner said that “Bitcoin is ought to be outlawed”. As Bitcoin gives an “anti-government” and “anti-regulation” feel.
- Jamie Dimon, Chairman of JPMorgan Chase criticized Bitcoin with a warning from the UK financial regulator against a speculative craze in ICO’s, where startups are funded by investing Bitcoin.
- Yann Quelenn, a banker stated that bitcoin “still has great potential”.
- As Bitcoin is still in its infancy stage, it has to overcome all the hurdles and be well- established. Bitcoin must adopt new features, tools, and services to secure the transactions.
- Many people are not aware of Bitcoin or cryptocurrencies, such people must be educated through conferences, seminars, and social media.