Before Bitcoin appeared in the year 2009, all financial transactions happened within a centralized system. Put simply, this means that banks or other financial authorities had to mediate these operations. Among others, the biggest problem many people have with traditional currencies is the fact that financial institutions and national governments are always in control of their value. This entails that arbitrarily-made political decisions can cause your money to become instantly less valuable in the marketplace.
Contrary to what happens with traditional currencies, cryptocurrencies are completely decentralized. They are created, stored and spent digitally. Cryptocurrency transactions are conducted immediately and anonymously between two parties. Cryptocurrencies also function as a platform for doing payments and trades online. The following guide will go over the main characteristics of this remarkable currency. It will also discuss the ways in which you can benefit from it.
What Is Bitcoin?
This cryptocurrency boasts the title of the first one to ever be implemented. Satoshi Nakamoto created it. He initially set out to create a peer-to-peer electronic cash system. However, the original idea evolved to become something more complex and more disruptive for traditional financial systems. As mentioned earlier, Bitcoin is a digital currency that, much like conventional currencies, can be transferred digitally to anywhere in the world.
However, unlike conventional currencies, Bitcoin’s most important characteristic is that it’s completely decentralized. That means that financial institutions of any kind will not mediate any of its transactions. Additionally, individuals or organizations cannot manipulate the Bitcoin value in any way.
Who Uses Bitcoin?
Currently, it is the most valuable currency in the world. In October of 2016, 274,486 active users around the entire globe used this cryptocurrency. That number includes over 100,000 merchants, a number that became a milestone in the community and the entire world. The fact that many big companies are starting to accept the currency as a form of payment definitely says a lot. By now, there are over 100 of these companies, and they are growing by the day.
There are several communities that of people who, apart from using the digital currency, actively participate in events that aim at celebrating it while extending its reach. This community includes all the people that create, develop and facilitate the systems by which it functions. This includes miners: people who analyze and secure transactions made with the currency in order to verify their validity.
How to Use Bitcoin?
Even though the digital coin is becoming more popular by the day, people still don’t use this currency in the mainstream. However, it’s the most popular type of cryptocurrency that a lot of people use online. Without having to recur to third parties of any sort, the people involved in the transaction can use the digital coin directly.
Even though these transactions are immediate, you need to confirm them at least once before you complete them. This is important because, in the name of transparency, one cannot reverse transfers once they completed them.
Users can conduct transactions using a digital wallet that serves the purpose of storing coins, keeping transfer data and allowing users to make payments. Once you have the wallet, it’s simply a matter of obtaining Bitcoin either as payment or directly through purchase.
One of the most interesting ways of earning the currency is by mining, a term that refers to perform transaction verifications for a reward. After earning coins, users can spend them as they prefer. There are several directories that offer listings of merchants that accept Bitcoin as a form of payment.
6 Benefits of Using Bitcoin
1. Easy and Convenient
Setting up a Bitcoin account is definitely not as complicated as doing the same with a conventional bank. Banks are extremely bureaucratic, resulting in high fees, extended delays, and too much paperwork. To the contrary, the most important cryptocurrency platform allows you to create an account within seconds. Also, it does not require users to provide additional personal information at any point during the process.
Amazingly, the platform does not require users to give out their names during any part of the process. Instead, they can user pseudonyms in order to conduct any transactions.
3. Completely Transparent
The Number of Bitcoin Transactions Made Per Month. Source: Wikimedia Commons
A database permanently records any and all transactions conducted using this digital currency into an archive denominated by the blockchain. This amazing archive stores every single detail of every conducted transaction. At the same time, it provides a public account of every transaction, ensuring complete transparency. Miners become especially important during this process due to their duty to verify and accept transactions.
4. Tiny Transaction Fees
The fees that this cryptocurrency charges are minimal in comparison to those that banks and other financial entities impose. In fact, they are often completely null.
Bitcoin offers almost no delay between transactions, strongly differentiating it from financial entities such as banks. Once the platform accepts an operation, it will create a visible transfer to the entire world within a matter of seconds. However, it still requires acceptance before the blockchain permanently logs it.
6. Irreversible Transactions
Unless their recipient sends them back, bitcoins are not retrievable in any way. Even though it may initially seem negative, this is actually a very positive quality because it ensures complete and non-negotiable transparency for every single transaction that a user does.
As a conclusion, it can be stated that this currency is definitely here to stay. The Bitcoin price has been steadily increasing over the last few years, with the Bitcoin to USD rate hitting an impressive $1,150 in January of 2017. Undoubtedly, that is something that should keep traditional banking financial institutions awake at night. Innovation is important to the economy, and there has been nothing as innovative as Bitcoin in the financial world within the last few decades. What do you think of this controversial new form of currency? Let us know!