The Basic Facts Of Bitcoin: The Pioneer In The Cryptocurrency World

When you wish to invest or trade the Bitcoin it makes sense to find out more about it. The Bitcoin is undeniably the first successful cryptocurrency in the world and learning its basics can help you get started. It is a digital, decentralized peer-to-peer payment system that is created electronically. So, the Bitcoin is not like paper money which is generated by banks and financial authorities. Instead, it is generated by businesses and individuals through advanced computers solving complex cryptographic puzzles.

  • The Bitcoin was first suggested by Satoshi Nakamoto and emerged as a payment method that would be independent of bank and government controls. Transfers are carried out through computers and transaction fees are much lower compared to fiat currencies. So, you cannot keep your Bitcoins in your pocket like you keep your Dollars and Euros.
  • Bitcoin has a finite supply; there will only be 21 million Bitcoins. Perhaps the biggest revolution that cam about with the discovery of the Bitcoin was the blockchain technology or distributed ledger technology. This DLT has a lot of potential and may be used in future for streamlining business operations.
  • The Bitcoin has not been created out of thin air. Rather, Bitcoins were produced through a mining process. The blockchain technology on which the Bitcoin is founded depends on a network of computers or nodes which will achieve integrity of transactions through a consensus. When a transaction is validated the nodes will use trial-and-error for solving complex mathematical problems. This needs specialized computers and once any computer can successfully solve the problem, it gets rewards in the form of Bitcoins. Bitcoin mining will create new Bitcoins and verify transactions in the Bitcoin network. But it needs specialized hardware, high power and bandwidth making it a rather costly affair.
  • Bitcoin has value and there will only be a maximum of 21 million Bitcoins in the world. So, Bitcoin is deflationary unlike paper currency that is inflationary. When Bitcoins are created by the Proof-of-Work protocol, mining gets authenticated and approved by a verifiable network.
  • One can use Bitcoins for payments both regionally and worldwide. Earlier, it was possible to use Bitcoins to buy everyday items like dinner and coffee. The prices at that time were not so volatile, and transaction times were relatively less because congestion on the blockchain was less. However, with increase in volatility today and higher transaction fees, using Bitcoins to pay for everyday items may not be worthwhile. It is useful for transferring large amount of money across borders.

So, to sum up, Bitcoin was the first successful programmable currency that provided users with virtual borderless cash. Today, the blockchain is changing economies as this disruptive technology has the potential to revolutionize different kinds of industries, not only the monetary system.  Because of the Bitcoin nature there has always been talk of banning the currency. This hostility can be explained by the fact that the Bitcoin operates beyond jurisdictions of traditional banks. The truth is that one cannot ban the Bitcoin because of its intrinsic nature; you can only regulate it. Countries like Thailand, Vietnam, and Bolivia have attempted to ban the Bitcoin while countries like Russia, Australia, Japan, etc are trying to regulate it.