Diverting from Physical Currency: The Payment System Just Got Digital
Ever heard of an online currency that only requires you to have access to the internet connection and a computer? While virtual currencies are not new, Bitcoin is a relatively new form of currency that is like no other. This is attributable to the fact that this currency has no central issuer. Bitcoin is real money with value, allowing users to exchange goods and services efficiently. However, most people are reluctant to use Bitcoin mainly due to its intangibility, and also because they don’t understand how it works. This article provides simple facts about this currency.
What is Bitcoin? This is a crypto-currency that was discovered by one Satoshi Nakamoto, whose units are created and controlled through cryptic process. It is a decentralized digital currency that relies on a peer-to-peer network that is operated by any of its users. Unlike any other currencies, Bitcoin transactions are not controlled by a central authority.
How does Bitcoin works? Bitcoin payments are conducted through a private network of computers, whereby every transaction is recorded in a public ledger known as the “blockchain.” The online ledger is created through a code-breaking work that is done by a network of “miners” who validate each transaction, effectively preventing double-spending. Bitcoin users are anonymous; it only requires a public-facing address for users to make transactions. It is possible to store, backup and encrypt Bitcoins securely offline on a memory stick.
What are the benefits of using Bitcoin? It does not allow a third-party seizure: Multiple redundant copies of the transaction database are produced. Thus no one can seize Bitcoins. Not even the government can freeze your wealth, which gives you complete freedom to do anything you wish with your money.
Bitcoin transactions attract no taxation: There is no viable way in which the government or any other person can implement a Bitcoin taxation system. This because no third party can intercept Bitcoin transactions.
Reduced transaction costs: Bitcoin transactions enable users to collectively contribute towards the network. Thus they share the burden of authorizing transactions. This makes the transactions costs negligible.
As Bitcoin’s popularity and usage grows, its value will grow in equal measures. Bitcoin transactions are extremely secure, cheap and expedient, and allow users to trade with a wide variety of people around the word.