What Is Bitcoin – 7 advantages of Bitcoin Network

What Is Bitcoin – 7 advantages of Bitcoin Network

Bitcoin – is a decentralized digital currency. It is not subordinate to the bank or the state. Means send and receive without intermediaries from one user to another. Each transaction is recorded in the blockchain registry, so money cannot be used twice or canceled a deal.

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Satoshi Nakamoto

Who created Bitcoin?

An anonymous developer who first published the protocol of the new cryptocurrency on the Internet called himself Satoshi Nakamoto. The creator of Bitcoin proposed the first Bitcoin wallet and generated the first block in 2008. The loss of electricity calculated the cost of one coin. Nobody knows what is bitcoin at that time.

The developer does not disclose his identity. In 2010, he transferred the project to others. The Bitcoin community is inclined to believe that the founder is English-speaking — currency descriptions and instructions in English evidence the opinion.

What about Bitcoin, how does it work?

The digital currency as Bitcoin or Litecoin or any other is a virtual link to a mathematical algorithm. You can buy or sell currency creating unique signed transactions. A worth set of people own coins.

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How bitcoin work

Getting any amount of crypto is like file sharing. A transaction is an exchange of digital signatures between electronic addresses. Bitcoin does not have a physical form. The circumstance must be taken into account since its value is the inability to fake a deal. Every investor wants to know that he will not be deceived when buying assets, and also that the state will not take most of it in the form of taxes.

The Bitcoin is decentralized

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The Bitcoin is decentralized

No one regulates your account, other users and the entire Bitcoin market as a whole. Money is stored at private addresses. Each transfer is unique. And the transaction will take place only between two participants, without intermediaries and regulators. Also, no one influences price, except for a free market mechanism.

The Bitcoin is digital

Digital keys for the transaction are generated when entering a password. The transaction is processed and spend in a few minutes, regardless of how far the seller and the buyer are from each other.

The anonymity of Bitcoin users

One of the best characteristics of digital currency is its anonymity. In the transaction chain, you can trace the relationship of wallet addresses with sent coins. But the numeric address has nothing to do with the real name of the person, sending money.

Transactions – private keys

Each sale requires a matching e-wallet address and a private key. A private key is a password or digital signature. After it has been entered in the appropriate field, the coins are sent to another wallet. Properties of operations with electronic currency:

  • The deal cannot be canceled. Before you start trading, you need to carefully analyze the buyer or service through which it is planned to work.
  • Hacking or picking up the private key that you own is almost impossible. To prevent attackers from finding your secret key, set strong passwords on hardware wallets, update the antivirus program on software in time. In this case, investing and storing any number of coins will be safe.

What is Bitcoin mining?

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Bitcoin mining

Mining is a new Bitcoins making process. In simple words, to mine new coins, you need to solve math problems. The algorithm is configured so that over time, the tasks become more and more complicated. At the same time, the number of Bitcoins in circulation that can ever be mined is limited to 21 million. The safety precaution is done to prevent inflation.

Bitcoin Metrics:

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Bitcoin metrics (aug 2019)

Important Bitcoin Charts:

How can I store my Bitcoins?

The owner can store his coins in several ways:

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Types of wallets
  • Write down the digital private key on paper. When it becomes necessary to make a deal, you will have to use a unique exchanger like Coinbase. To choose the most effective service, you need to study the reviews on the forum.
  • Coins can be encrypted in a hardware wallet. Different brands make them. These wallets are like flash memory or a credit card with a button. The degree of convenience and reliability are directly proportional to the price.
  • Software wallets for storing coins are computer programs. They can be installed on a PC or smartphone. The former is more reliable. The latter has a simple interface and fewer functions.
  • Private services on the Internet also offer to keep your finances. There is the easiest and at the same time, the most unreliable option. Since your secret key is known to a third party, nothing will prevent the owners of the service from appropriating your money.

To learn more about wallets you can check our Bitcoin and cryptocurrency wallets guide

How do I buy and sell stuff things with Bitcoins?

The network allows you to buy any items and pay bills without using the physical currency. The transaction process takes place in several stages:

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  1. The buyer sends the seller a signed transaction in exchange for the goods. A cipher consists of a sequence of characters and numbers. The information on the current transaction, the number of coins and the address of the recipient’s wallet are encoded in a signed deal.
  2. The seller of the goods scans the received secret key using a web application or computer program. That is, his wallet recognizes the received cipher.
  3. All other participants in the blockchain algorithm can track the transaction.
  4. The algorithm will confirm the deal in a few minutes.

Can Bitcoin be Converted to Cash?

There are official and unofficial ways to get cash in exchange for cryptocurrency. Some private individuals build their businesses on this. But in this case, you need to be careful not to give the savings to fraudsters.

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Specialized exchanges and exchangers are a more reliable option. Not all exchanges trade in fiat currencies. You will like Currency, Stex, Kucoin. The process of buying dollars, euros, yuan or rubles consists of several stages:

  • You need to register on the exchange;
  • Choosing the right cryptocurrency and the number of coins in your wallet;
  • In the “Bidding” section, you need to select the currency pair that interests you;
  • Set your price;
  • Another bidder arranged by the price will confirm your transaction;
  • In the “Finance” section, send the received fiat currency to your bank card.

How do I purchase a Bitcoin?

To enter the community of cryptocurrency owners, you need to purchase coins for fiat money on the exchange or in specialized ATMs. Fiat is ordinary paper money, such as dollars or euros. It is not necessary to deposit cash, and credit card payment is suitable.

Popular exchanges that trade Bitcoins for fiat money:

You can also use special exchangers:

  • CoinCorner
  • Ramon-cash
  • Xchange

Bitcoin Compared to Banks and Traditional Currencies

The main difference of any cryptocurrency is the lack of central control. Markets of cryptocurrencies are developing spontaneously. All transactions are free of state or bank fees. There is no inflation at all.

Is Bitcoin a pyramid scheme?

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The participants in the financial pyramids receive income after the introduction of new participants into the scheme. Bitcoin owners do not receive any profit if they do not play at the auction or invest their currency. Moreover, due to the limited amount of money, every year, it becomes more valuable.

Is Bitcoin a bubble?

Some researchers, including Nobel laureate Robert Schiller, suggest that interest in cryptocurrencies is artificially inflated. However, after the crash of the Chinese exchange Mt.Gox, the cue ball regained its position in just three years.

What are the disadvantages of Bitcoin?

Legal questions

Some countries have chosen to ban the use of cryptocurrencies. Others, on the contrary, legalized Bitcoins to be able to levy taxes on them as well as on any other assets. But most states ignore the cryptocurrency settlement system.

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Legality of bitcoin by country

Level of recognition

The first to recognize the solvency of cryptocurrencies on the black market. In most countries, you still cannot pay with Bitcoins in a store. It is unlikely that digital coins can displace fiat money from circulation entirely.

Lost keys

A unique private key is an analog of the password from your wallet. If you have lost or forgotten your password, no one will be able to regain access to your coins. Therefore, you must use the private key backup function.

Volatility

It is impossible to predict how much Bitcoin will cost tomorrow or in a year. Throughout its history, one coin has a value equal to the energy spent or several thousand dollars.

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Bitcoin Volatility vs Other Assets (1 Year Volatility)
(source: charts.woobull.com)

Continuous development

It is difficult to predict the event of any cryptocurrency. The situation will fundamentally change if the state or the central bank wants to take control of Bitcoins. Also, a new round of changes will occur when it becomes impossible to mine new coins.

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Screenshot: Bitcoin github activity

What are the advantages of Bitcoin?

Freedom

More and more online sites accept payment in Bitcoins. Given that the bank cannot control you, this is beneficial. Also, no one can track that it was you who made the purchase. The real name has nothing to do with the digital wallet.

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Banking middleman in Money Transfer

High portability

You do not need to carry thick wads of cash. Any amount of coins is placed on a hardware wallet the size of a USB flash drive. To complete the transaction, enter the symbol key in the required field.

Choose your commission

Most digital wallets allow you to configure and modify this option. If transaction speed is essential to you, increase the commission. If speed is not crucial, you can save on it.

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No PCI

PCI is the data security standard of the payment card industry. When using a regular bank card, its holders provide the bank with their data. Thus, there is a risk that someone else will intercept this information. Also, cardholders are forced to pay bank fees. When using Bitcoins, all these inconveniences are not.

Safety and Control:

• No matter what type of wallet you use, back up your private key.

• Store most of your coins in a cold store (hardware wallet without internet access or paper).

• Create a secure password for your desktop and mobile wallet.

Transparent and neutral

All Bitcoin coins users have access to a standard transaction log, or rather, to their addresses. To remain completely anonymous, you need to change the address after each transaction. To prevent other users from tracking your balance, open several digital wallets for different purchases.

It can’t be counterfeited

Cryptocurrency wallets use private keys to complete the BTC transaction, which is generated in conjunction with the address at which the coins are placed. It is impossible to fake such a key. Thanks to the recording of each transaction in the Blockchain BTC algorithm, no one can use the same coins twice.

Why is Bitcoin such big news?

Digital currency is ideal for international transactions. Transactions are fast and free of charge. When you purchase costly items, you remain anonymous. Many investors regard Bitcoins as an additional tool for trading on exchanges.

Future of Bitcoin

Japan, Belarus, United Kingdom, United States, Australia have already legalized Bitcoin. See the full list here. Their policy means that the currency and transactions with its use will be taxed. In the future, other countries may also want to take control of digital currencies.

Conclusion

Bitcoins and other altcoins are now the perfect means of payment on the Internet. They can also be included in the investment portfolio of a stock player. The main thing is to choose a reliable wallet for storing coins and not lose your private key.

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