In today’s digital world, a different kind of currency is getting adopted by many individuals and businesses for their daily-to-daily financial transactions in a shape of digital payment system. The global market is getting filled with a new kind of money, as crypto-currency, a money for Internet.
In the category of crypto-currencies, the most popular and effective digital money in modern society is Bitcoin, followed by Bytecoin, Litecoin, Dogecoin and others. Bitcoin is presently the most used and innovative currency, which is said to become the future of money.
There are also many people around the world who are not aware with this new kind of digital currency, and if you are among them! Then you might be thinking about; what is bitcoin and who created it? In below paragraphs tried to introduce you to this technology.
# What is Bitcoin?
Bitcoin is a powerful consensus network, which enables a new kind of payment system and a completely secure digital money. Bitcoin is the world’s first decentralized money, working on peer-to-peer payment network and is powered by its global users with no central authority or middlemen.
Bitcoin is said to be the future of currency, as from a user point-of-view, it is pretty much same like cash for the Internet. Bitcoin can also be observed as the most prominent triple entry book-keeping system in existence. The modern society is loving it!
Who Created this Bitcoin?
Bitcoin is the world’s first implementation of a concept getting called “crypto-currency”. Bitcoin was first described by Wei Dai in 1998 on the cypherpunks mailing list, suggesting the idea about a new kind of money that uses cryptography technology to control its creation and transactions, without any central authority.
In the year 2009, world’s first Bitcoin specification and proof of concept was published by Satoshi Nakamoto in a cryptography mailing list. In late 2010, Satoshi left bitcoin project without revealing much about himself. Since that, the community has grown exponentially with great developers working on it.
Satoshi Nakamoto’s anonymity often raised unjustified concerns, many of which got linked to misunderstanding of the open-source technology of Bitcoin. It’s protocol and software are published openly, and global developers can review the code or make their own version of the Bitcoin software.
Just like current developers, Satoshi Nakamoto’s influence was limited to the changes he made, now being adopted by others and therefore he never control Bitcoin. As such, the identity of Bitcoin’s inventor is probably as relevant today as the identity of the person who invented paper.
There are large number of people around the world who presently utilizing and supporting this new kind of secure currency. Individuals and business merchants are now getting attracted towards Bitcoin’s innovative payment system invented by Satoshi Nakamoto in 2009.
Bitcoin (BTC), is the world’s first digital currency, used by billions of individual users and businesses across the globe due to its secure cryptography technology, making it one of the most innovative payment system in modern Internet era. And has become the money for the Internet.
Those who are new to this digital currency of the future, might be thinking about what is Bitcoin, or wondering about who created it? Might be trying to know who controls the Bitcoin network and how does it work? In this article tried to share the knowledge!
Who Controls the Bitcoin Network?
To be simple, presently nobody controls Bitcoin, just, like no one owns the technology behind email. Bitcoin networks is controlled by it’s worldwide bitcoin users. While developers are still improving this technology, so a change in the network protocol can’t be enforced because all users are free to choose the software and use.
In order to stay compatible with the network, all users need to use software complying with the same standard rules. Bitcoin can work correctly with a complete consensus among all users. Therefore, all users and developers have a strong incentive to protect this consensus network.
How Does Bitcoin Network Works?
From a general user perspective, a Bitcoin is nothing more than a mobile app or computer software, which provides a personal BTC wallet and allows any user to send and receive bitcoins with them. This is how the innovative Bitcoin network works for most users across the borders.
Behind the scenes, the secure Bitcoin network is sharing a public ledger called the “block-chain” for better transactions transparency. This public ledger contains every transaction ever processed, by allowing a user’s computer to validate and verify each transaction.
In bitcoin technology, the authenticity of each transaction is protected by secure digital signatures corresponding to the sending addresses, and allowing all users to have full control over sending BTCs from their own Bitcoin addresses anywhere, anytime.
In addition to this, anyone can easily process bitcoin transactions using the computing power of specialized hardware and earn amazing reward as BTCs for this service. This is often called “bitcoin mining”.
Today’s modern world is utilizing the power of digital technologies and with the growth in cryptography protocol and vast gain in the name of digital currency. Bitcoin is getting more and more popular across the borders. Bitcoin’s consensus network has become a new payment system based-on digital money.
World’s very first decentralized peer-to-peer payment network is powered by open-source project without any central authority or middlemen and has become new cash for the Internet. One of the first implemented concept called “crypto-currency” in modern world.
Who Really Does Uses Bitcoins?
Off-course people from all over the world using Bitcoins! There are a large number of individual users and businesses using Bitcoin for their financial transactions. Including brick-and-mortar businesses like restaurants, apartments, law firms, as well as many popular online products and services providers.
No-matter, while the Bitcoin remains a relatively new phenomenon, it is growing fast like non-other currency grew ever. At the end of August 2017, the total value of all existing bitcoins exceeded 40 billion US dollars, with millions of dollars worth of BTCs exchanged on daily basis.
The innovative system makes it one of the most universal currency for the future, which can be effectively utilized by more and more users and business across the borders for better global financial transparency.
How Do People Acquire Bitcoins?
There are may ways by which people are acquiring bitcoins, one of the most powerful and innovative way to acquire bitcoins is through sending and receiving it as a payment system for goods or services. Many of the individual users, freelancers and businesses have already started using it!
Besides using bitcoins as an alternative payment system, one can also acquire it by the following ways.
- Purchase Bitcoins: There are many great BTC exchanges available these days after the growth in digital payment system, and interested may acquire it through the Bitcoin exchanges.
- Exchange Bitcoins: There is another great option by which one can obtain bitcoins, is through someone near them in their local community.
- Earn Bitcoins: Another most powerful way to earn bitcoins through competitive coin mining by investing in BTC mining hardware and technology.
While it can be possible to find someone who wish to sell bitcoins in exchange for the PayPal or a credit card payment, but most exchanges do not allow funding via these payment methods. Due to reverse transactions issues, which is commonly referred to as a charge-back.
From any user perspective, Bitcoin is a powerful mobile app or computer program that provides a secure personal Bitcoin wallet address and allows any user to send and receive bitcoins within those wallet addresses. Simply, this is how a Bitcoin network works for most users and businesses across the globe.
Those who are totally new to this bitcoin technology may learn something about what is bitcoin, who does controls and owns the bitcoin network and how does it works? In this article trying to explain how easy is it to make the Bitcoin payments? To learn this read the below paragraphs.
How To Easily Make a Bitcoin Payment?
In compare to any previous currency, the Bitcoin payments are much more easier to make than debit or credit card purchases, and can be received without a merchant account, that was never possible before. This is perhaps the most innovative money for the Internet.
Through bitcoin technology, all payments are made securely from a bitcoin wallet app, either on your computer or mobile, or tablet by entering the recipient’s wallet address, the payment amount, and pressing send button. Learn about how to get started.
It really makes it easier to enter a recipient’s address, many wallets addresses can be obtained by just scanning a QR code or touching two phones together with NFC technology, it ‘s that easy.
Anyone can process transactions using the computing power of specialized hardware and earn a reward in bitcoins for the service. This is often called “mining”.
As a matter of fact about the Bitcoin is that, many people around the world are still unknown to this digital currencies and Bitcoin. Perhaps, many big businesses have started accepting bitcoins because of the advantages, but the list is pretty small in compare to physical currencies so far!
Like many other popular discoveries in past, this digital currency is also gaining a huge popularity worldwide and mass adaptation in various forms. Many countries who initially banned Bitcoin are now looking forward to legalize it for many great possibilities.
This is true that, during its initial stage, Bitcoin faced a lot of criticism from every corner of the world and was considered to be a great scam due to it’s various negative factors and misunderstandings.
Over the time when experts started examining Bitcoin from every sectors, they understood the power of digital currencies and started to look into it in a more positive way! For the future ideas.
If Bitcoin, an innovative money of Internet has many advantages, it also comes with different disadvantages as well.
What are the Top Advantages of Bitcoin?
Every new invention brings great possibilities, here are some of the wonderful advantages of bitcoin technology in modern lifestyle as per the global experts.
# Get the Freedom of Payments
Bitcoin currency brings the possibilities to send and receive money from anywhere, anytime in the world. There is no need to wait due to bank holidays. No bureaucracy. No borders. Bitcoin allows its users to be in total control of their money.
# Free to Choose Your Own Fees
In this platform, there is no fee to receive bitcoins, and many wallets let users control how large a fee to pay when spending for the product or service. The higher fees can encourage faster confirmation of all transactions. Fees are unrelated to the amount transferred, it’s possible to send 100,000 BTCs for the same fee it costs to send 1 BTC.
Merchant processors assists merchants in processing transactions, converting BTCs to local currency and depositing them directly into merchants’ bank accounts. These Bitcoin based services can be offered for much lower fees than any previous payment systems.
# Gets Fewer Risks for Merchants
Bitcoin transactions are made to be secure, irreversible, and does not contains customers’ sensitive or personal information. Which protects merchants from many losses caused by fraud or fraudulent payment charge-backs, and there is no need for additional PCI compliance.
Merchants can easily expand their businesses to new markets where either credit cards are not available or fraud rates seems to be unacceptably high. The net results are lower fees, larger global markets, and fewer administrative costs.
# More Security and Control Ever!
Bitcoin’ users are in full control of their transactions; it is said to be impossible for the merchants to force unwanted or unnoticed charges as that could happen with other payment methods. It is developed to be a secure payment system.
Every Bitcoin payments can be made without getting any personal information tied to the transactions. This system offers a strong protection against identity theft. Users can protect their money with backup and encryption too.
# Most Transparent and Neutral
No individual or organization can control or manipulate the Bitcoin’s protocol because it developed as a cryptographically secure network. Which allows the core of it, to be trusted for being completely neutral, transparent and predictable.
All the information concerning the Bitcoin money supply is itself readily available on the ‘block chain’ technology for anybody to verify and use it in real-time.
What are the Top Disadvantages of Bitcoin?
Like every actions there is an equal and opposite reaction, here are some of the top disadvantages of bitcoin technology in modern globalism scenarios.
# The Degree of Acceptance
All over the world, many people are still unaware of Bitcoin. In present era, more businesses are accept bitcoins because they know the advantages of doing so, but the list remains small and still needs to grow in-order to get benefited from the network effects.
# Total Volatility
The total value of bitcoins in circulation and the number of businesses using it are still very small in compare to what they could be. Therefore, relatively small events, trades, or business activities can significantly affect the price.
In theoretical way, this volatility will decrease as Bitcoin markets and the technology gets matured. The world has never seen a start-up currency before, so it is truly difficult to imagine how it will play out!
# Still Ongoing Development
Bitcoin software is still in its beta phase with many incomplete features in active development mode. There are still new tools, features, and services need to be developed to make this currency more secure and accessible to the masses.
Some of these features are still not ready for everyone. In general, Bitcoin is still in the process of maturing. Most Bitcoin businesses are new and still offer no insurance.
The huge growth in bitcoin technology making everyone think that, can we trust bitcoin as the future of money? Or shall we put our money & believe in Bitcoin? Most of the experts would say that keeping assets in Bitcoin is anything but a “sure thing”.
Today the world knows that the price of bitcoin is getting higher and higher everyday then any previous currencies. This indicates how strongly the bitcoin technology is getting adopted everyday.
Learn about why users trust bitcoin and can anyone make money using the innovative technology of bitcoin, which was invented by satoshi nakamoto in 2009.
# Why Do People Trust Bitcoin Platform?
Much of the trust in Bitcoin technology comes from the fact that it just requires no trust at all. The Bitcoin is fully powered by open-source project and decentralized system. Which means that anyone can get access to validate the entire source code at any time.
The technology is opened, an any developer in the world can therefore verify exactly how the Bitcoin works. All transactions and BTCs issued into existence can be transparently observed in real-time by anyone.
All payments in bitcoins can be made without reliance on any third-party and the whole system is fully protected by heavily peer-to-peer cryptographic algorithms like those used for online banking systems.
And the surprising part is that, no organization or individual can ever control Bitcoin, and the network always remains secure, even though if not all of its users can be trusted.
# Can We Really Make Money with Bitcoin?
Nobody should ever expect to get rich-soon with Bitcoins or any other emerging technology. It’s always important to be wary about anything that sounds too good to be true or seems to disobey basic economic rules. It is a growing space of innovation and there are certain business opportunities that may include risks.
There is seriously, no guarantee that Bitcoin will continue to grow in future, even though it has developed at a very fast rate so far. Investing time and resources on things related to Bitcoin requires entrepreneurship skills. That need to be learned and informed.
At present market, there are different ways to really make money with Bitcoin such as coin mining, speculation or running new businesses. All of these methods are still in competitive mode and there is no guarantee of profit.
It is totally up to each individual or business to make a proper evaluation about the costs and the risks involved in any such project which is still in its beta phase.
Bitcoin is world’s first consensus network, which enables a new kind of digital payment system and a completely cryptographic money based on computing technology. Bitcoin is the only first decentralized peer-to-peer payment network powered by its users without any centralized authority or middlemen.
From a general user perspective, Bitcoin is termed as pretty much same as cash for the Internet. There is nobody who owns the Bitcoin network just like no one owns the technology behind email.
Bitcoin is basically controlled by all its users from around the world. Which makes it one of the most powerful and innovative currency of all time, if used in positive possibilities.
People who are new to bitcoin technology might be thinking about, is Bitcoin fully virtual, immaterial and anonymous? Here tried to explain those concerns!
# Is Bitcoin fully Virtual and Immaterial?
Bitcoin is as virtual as the credit cards and online banking networks people use everyday. Bitcoin can be used to pay online and in physical stores just like any other form of money. Bitcoins can also be exchanged in physical form such as the Casascius coins, but paying with a mobile phone usually remains more convenient.
Bitcoin balances are stored in a large distributed network, and they cannot be fraudulently altered by anybody. In other words, Bitcoin users have exclusive control over their funds and bitcoins cannot vanish just because they are virtual.
# Is Bitcoin Fully Anonymous?
The Bitcoin’s technology has been designed to allow its users to send and receive payments with an acceptable level of privacy as well as in any other form of money. However, Bitcoin is not fully anonymous and cannot offer the same level of privacy as cash or other previous currencies.
The use of Bitcoin leaves extensive public records. There are various mechanisms already existing to protect its users’ privacy, and more are in development. However, there is still many work to be done before these features are used effectively by most Bitcoin users.
Some concerns have been raised that private transactions could be used for illegal purposes with Bitcoin. However, it is worth noting that it’ll undoubtedly be subjected to similar regulations that are already in place inside the existing financial systems.
The Bitcoin cannot ever be more anonymous than cash and it is not likely to prevent any criminal investigations from being conducted as per the experts. Additionally, this technology is also designed to prevent a large range of financial crimes and scams.
Bitcoins are the most innovative and revolutionary discovery ever in the mankind’s history. It has become one of the most valuable currency in digital form. Working based-on cryptographic protocol, which also makes it one of the most secure virtual currency of the Internet.
Due to it’s huge popularity and market demands, bitcoin is getting more and more adopted by the worldwide communities due to its open source technology, which can be easily be verified for any issue.
What Happens When Bitcoins are Lost?
Bitcoin is hard to earn. When someone loses his/ her bitcoin wallet, it brings the effect of removing money out of the currency circulation. All those lost bitcoins still remain in the “blockchain” system just like any other bitcoins.
However, all lost bitcoins remain dormant forever because there is really no way for nobody to find the private key(s) which would allow them to be spent again in the future.
Due to the law of supply and demand, when fewer bitcoins are available in circulation, the ones that were left will be in higher demand and thus increase in value to compensate.
Bitcoin cryptocurrency of the future should not be lost by anyone as it takes time and efforts to earn bitcoins and effectively maintain the present bitcoin’s circulation.
If someone really looses their bitcoin wallet, then it still remains in the system but can’t be spent by anyone without the private key created by the wallet owner.
Can Bitcoin scale to become a major payment network in future? As the gain in popularity create this question in many people’s mind, those who are new to Bitcoin technology or those who misunderstood this digital currency for no reasons
Can Bitcoin Become a Major Payment System?
The Bitcoin networks can already process a much higher number of financial transactions per second than it does today. Bitcoin is, however, not entirely ready to scale to the level of major credit card and payment networks.
Bitcoin work is still underway to lift current limitations, and our future requirements are well known. Since inception, every aspect of the this digital currency’s network has been in a continuous development.
The bitcoin development process is continuously gaining the level of maturation, optimization, and specialization, and it should be expected to remain this way for many years in future.
As the traffic grows, more Bitcoin users may start using lightweight coin clients, and full network nodes may become a more specialized service provider.
The bitcoin network is already getting adopted large number of individuals and businesses across the globe and by coming days it is expected to grow.
To learn more about the bitcoin network and what the experts of the world thinks about this technology, see the Scalability page on the Wiki.
Bitcoin is the world’s first cryptographically made currency, getting huge acceptance around the globe. Most of the individuals and businesses are now adopting this digital money in their payment networks, which is the most innovative payment system of all time created for future possibilities.
Like any other great invention Bitcoin is also facing certain criticism, but this will never stop this digital currency to become one of the major payment network of the future. Because, it has got all those characteristic that was never present in past currencies.
Is the Bitcoin Currency legal?
To the best of experts knowledge, Bitcoin has not been made illegal by any legislation in most of the jurisdictions across the world. However, some jurisdictions like: Argentina and Russia severely restrict or may ban foreign currencies.
Many other jurisdictions in the world such as: Thailand may also try to limit the licensing of certain entities like Bitcoin exchanges and bitcoin trading platforms with no reasons.
Regulators from different jurisdictions are already taking steps to provide individuals and businesses with ideas on how to integrate this new kind of money with formal, regulated financial system.
A bureau in the U.S. Treasury Department, the Financial Crimes Enforcement Network (FinCEN), issued a non-binding guidance on how it characterizes certain activities involving virtual currencies.
Is Bitcoin Useful for the Illegal Activities?
Bitcoin is also money, and from the beginnings money has always been used both for legal and illegal purposes worldwide. The cash, credit cards and current banking systems hugely surpass Bitcoins in terms of their use to finance crime and illegal activities.
Bitcoin is developed to bring significant innovation in future payment systems and the benefits of such revolutionary innovation, are often considered to be far beyond their potential drawbacks.
Bitcoin is designed to be a wide step forward in making global money more secure and could also act as a significant protection against many forms of financial crimes and bad activities.
For instance, bitcoins network is completely impossible to counterfeit. It’s users are in full control of their payments and couldn’t receive unapproved charges such as with credit card frauds.
Bitcoin transactions are irreversible and immune to fraudulent charge-backs which has been happening around the world with current financial and banking systems.
Bitcoin is designed to allow money to be secured against theft and loss using a very strong and useful mechanisms like: backups, encryption, and multiple signature keys.
Many concerns have been raised around the world that Bitcoin could be more attractive to criminals, because, it can be used to make private and irreversible payments.
However, these features were available in past, and already exist with present cash and wire transfer systems, which are widely used and well-established across the world.
The use of this digital money will undoubtedly be subjected to similar regulations that are already in place inside ongoing financial systems, and it’s not likely to prevent criminal investigations from being conducted.
In general concept, it is common for important breakthroughs to be perceived as being so controversial before their benefits are well understood by the general pubic.
To understand everything about its legality, or usefulness only to illegal activities, the Internet is a great place among many others to illustrate this easily.
The cryptographically made currencies like Butcoin, is developed in other to bring new possibilities in payment system. This digitally advanced money is designed for fast and secure payment processing across the boundaries without any central control or middlemen.
This brings new kind of experience to its connected users, today everyone can see how this new kind of Internet money is getting hugely adopted by many individual users and businesses worldwide for their fast and secure financial transactions.
But, due to its huge popularity, the big question arises is, can Bitcoin be regulated under taxes and laws? Because, the present financial system around the world is regulated through different monetary laws and taxes!
# Can Bitcoin Currency be Regulated by Laws?
The Bitcoin’s network protocol itself cannot be modified by anyone without the cooperation of all of its users, who are free to choose what software they use. Attempting to assign different rights to any local authority in the rules of the Bitcoin network is not practically possible.
Any financially strong organization could easily choose to invest their capital in bitcoin mining hardwares to control half of the computing power of the network, and can also become able to block or reverse recent transactions.
However, there is no serious guarantee that they could retain this computing power, since this requires to invest as much as possible than all other miners in the world.
It is however quite possible to regulate the use of Bitcoin system in a similar way to any other instrument regulated by different laws.
Just like the U.S. Dollar, Bitcoin can also be used for a wide variety of purposes, some of which can be considered legitimate or not as per different jurisdiction’s laws.
In this regard, the Bitcoin is no different than any other present tool or resource and can be easily subjected to various rules and regulations in each country.
Bitcoin use could be made difficult by restrictive regulations, in that case, it would also be hard to determine what percentage of users would be using the technology.
A government which chooses to ban Bitcoin would prevent their domestic businesses and markets from developing, and shifting innovation to other countries.
The challenge for regulators, as always be, is to develop efficient solutions while not impairing the growth of new emerging markets and business sectors.
# What about Bitcoin and Financial Taxes?
The Bitcoin is not a fiat currency with any legal tender status in any jurisdiction, but often the tax liability accrues regardless of the medium being used. Every jurisdiction around the world is free to regulate it!
There is a wide variety of legislation available in many different jurisdictions which could cause many sales, income, payroll, capital gains, or some other form of tax liability to arise with it.
Bitcoin digital money is designed to be the future of money and presently in most part of the world it is getting adopted by many individuals and businesses as a new payment system.
What do you think about this money for Internet! Can it be possible and beneficial to regulate Bitcoin with different kinds of monetary laws and taxes?
Bitcoin digital money is designed for the future to have a huge step forward in making money more secure and that could act as a significant protection against many forms of financial crimes. The bitcoins system is completely impossible to counterfeit.
Consumers are in full control and protection of their payments and cannot receive unapproved charges such as with many credit card frauds. Bitcoin’ transactions are always irreversible and immune to fraudulent charge-backs.
Bitcoin’s technology allows money to be more secure against theft and loss using a very strong and useful innovative mechanisms, in-built with wallet backups, encryption, and multiple private signature keys.
# Things About Bitcoin and Consumers Protection?
Bitcoin is freeing everyone to transact on their own terms and conditions. Through Bitcoin’s payment network, each user can receive and send payments in a similar way to cash, but they can also take part in more complex transactional contracts.
Under Bitcoin’s revolutionary and innovative technology, multiple private signature and keys allows a transaction to be accepted by the network, only if a certain number of defined group of persons agree to sign the transaction.
It allows innovative dispute mediation services to be developed for the future. Allowing third-party to approve or reject a transaction in case of disagreement between the parties, without having control on their money.
As opposed to cash or any other payment methods, Bitcoin leaves a public proof that a transaction did take place, that could potentially be used in a recourse against businesses with fraudulent practices.
It is also worth noting that while businesses usually depend on their public reputation to remain in market, and pay their employees, they don’t have access to the same level of info when dealing with new consumers.
It allows both individuals and businesses to be protected against many fraudulent charge-backs while also giving the choice to the consumer to ask for more protection when not willing to trust a particular merchant.
This is how, bitcoin would be able to change the way world is transacting, this digitally advanced technology is designed and developed to be the future of currency, the money for Internet.
It seems like the world is looking for a new way to transact, and Bitcoin’s innovative technology has revolutionised it with a new kind of cryptographically made digital payment system. Presently more individuals and businesses adopting this digital currency in their everyday lifestyle.
The modern societies have accepted this new kind of currency, which is termed as the future of money, is getting loved by large number of individual users and business firms across the boundaries. And, getting adopted widely as an innovative way to transact freely.
# How Bitcoins are Created?
New bitcoins are always generated by a competitive and decentralized process known as “mining”. This mining process involves may individuals, those are rewarded by the network for their services.
Bitcoin miners are continuously processing transactions and securing the entire network using specialized mining hardware, and are collecting new bitcoins in exchange.
The Bitcoin network protocol is designed in such an advanced way that new bitcoins are only created at a fixed rate and intervals. Which makes Bitcoin mining a huge competitive business.
When more and more miners join the network, it becomes increasingly difficult to make a profit, and miners must seek efficiency to cut-off their operational costs for mining.
There is No centralized authority or developer even has any power to control or manipulate the Bitcoin’s system to increase their profits or mislead the protocol.
The Bitcoin’s system is said to be so powerful that, every node in the world will instantly reject anything, which does not comply with the rules, expected for the system to follow.
Bitcoins are created at a decreasing and predictable rate.
The number of new BTCs created each year is automatically halved over the time until it issuance halts completely with a total number of 21 million bitcoins in existence.
At this point, the Bitcoin miners will probably be supported exclusively by numerous small transaction fees.
# Why do Bitcoins have Value?
Bitcoins have value because they are useful as a form of money. It has the characteristics of money like: durability, portability, scarcity, divisibility, fungibility, and recognizability.
Bitcoins valued based on the properties of mathematics rather than relying on physical properties like: gold and silver or trust in central authorities like different fiat currencies.
In short, It is backed by mathematics. With these attributes, all that is required for a form of money to hold value is trust and adoption.
In the case of Bitcoins, this can be measured by its huge growing base of individual users, business merchants, and worldwide startups.
As with all currency, bitcoin’s value comes only, and directly from people willing to accept them as payment system.
Present societies seem to like this new kind of digital currency, termed as the future of money! As, large number of users and businesses across the boundaries have adopted it as an innovative way to transact freely.
Bitcoin the money of future is cool. The Internet’s currency, a secure, a private, and a decentralized kind of money which makes it possible for everyone to anonymously and virtually make cost-less transactions across borders. Which contains the seeds of its own destruction, as per by many experts on the Internet.
Presently more and more individual users and worldwide businesses have started accepting this digital currency for their day-to-day transactions freely, securely, privately, and without the control of any central authority or middlemen.
There are many people and businesses still unaware about this innovative system discovered by Satoshi Nakamoto. The Bitcoin system is great, but it can be used for illegal activities to scam others, like still happening with other currencies!
Many people and businesses who are uninformed and still new to this, might be thinking about, is Bitcoin a bubble, or any ponzi scheme? This article tries to explain this in below paragraphs.
# Is Bitcoin a Big Bubble?
In case of Bitcoin, a rapid rise in price does not constitute a bubble kind. An artificial over-valuation leads to a sudden downward correction that constitutes a bubble.
Choices based on Individual user action by hundreds of thousands of global market participants is the cause for bitcoin’s price to fluctuate as the market seeks price discovery.
Different reasons for changes in sentiment may include a loss of confidence in Bitcoin’s technology, a large difference between value and price not based on the fundamentals of the Bitcoin economy.
Increased press coverage stimulating speculative demand, or fear of uncertainty, and old-fashioned irrational exuberance and greed.
# Is Bitcoin a New Ponzi Scheme?
A classic Ponzi scheme is a fraudulent investment scheme operation that pays returns to its investors from their own money, or the money got paid by subsequent investors, instead of profit earned by the individual users running the business.
Ponzi schemes are specifically designed to collapse at the expense of the last investors, when there is not enough new participants. But, Bitcoin is an open source project with no central authority.
So, there is nobody is in a position to make fraudulent representations about any investment returns. Like in other major currencies such as Gold, the U.S. Dollar, Euro, or Yen, etc. there’s no guaranteed purchasing power, and the exchange rate floats freely.
This really leads to volatility where users of bitcoins can unpredictably make or lose their money.
Beyond speculation, Bitcoin is also an innovative digital payment system, which is totally new, but with useful and competitive attributes that are being used by thousands of individual users and businesses across the boundaries.
Bitcoin (BTC) is built-with a consensus network, that enables a new kind of payment system and a completely digitalized form of money. Bitcoin is the world’s first decentralized peer-to-peer payment network – powered by its users – without any central authority or middlemen.
Bitcoin’s technology itself is said to have one of most cryptographically advanced and secure network, which is hugely getting adopted as a new kind of crypt-o-currency. Here are few things related to security and concerns about getting it hacked.
# Is Bitcoin really Secure?
The Bitcoin technology is built-on the protocol and the cryptography, that has a strong security track record, and the network is also said to have probably one of the biggest secure distributed computing project in the world.
It’s most common vulnerability is in individual user error. Bitcoin wallet files which stores the necessary private keys, can be accidentally lost, stolen or deleted. This is pretty much similar to physical cash stored in a digital form by any user.
Fortunately, there are options, where users can employ better security practices to protect their money or even use service providers those offering good levels of security, and reliable insurance against theft or loss.
Bitcoin is designed to be a free, secure, private and decentralized payment system with the technology of cryptographically advanced protection system for all transactions digitally.
# Can’t Bitcoin be Hacked Ever?
The rules of the protocol and the cryptography script used for Bitcoin system, are still working years after its inception, which is a pretty good indication that the concept is well designed in itself for the future possibilities.
However, security flaws have been found, and fixed over time in various software implementations. Like any other form of software, the security of BTC software depends on the speed with which problems are found and fixed.
The more such issues are discovered, the more BTC is gaining maturity. There are often various misconceptions about thefts and security breaches, that happened on various diverse exchanges and businesses.
Although these events are unfortunate, none of them involve BTC itself being hacked, nor imply any inherent flaws in Bitcoin; just pretty much like a bank robbery, that doesn’t mean the dollar is compromised.
However, it is accurate to say that a complete and powerful set of good practices and intuitive security solutions is required to give users better protection of their money, and reduce the risk of theft and loss.
Over the course of the last few years, those security features have quickly developed, in digital forms, such as wallet encryption, hardware wallets, offline wallets, and multi-signature transactions etc.
Bitcoin mining is how Bitcoin transactions are verified and confirmed by the Bitcoin network. Bitcoin miners create a new block, by solving a proof of work problem which is chained through cryptographic proof to the previous block.
Those who are new to bitcoin technology, might be thinking about, what is bitcoin mining process, or how does the bitcoin mining system really works?
# What is Bitcoin Mining?
Bitcoin mining is the process of spending computing power to process transactions, secure the network, and keep everyone in the system to get synchronized together.
It could be perceived how the Bitcoin’s data center except it to be, the mining system has been designed to be fully decentralized with miners. Operating across the globe from different countries, and there is no individual is having any control over the mining network.
This process is referred to as “bitcoin mining” and an analogy to gold mining, because it’s also a temporary cryptographically generated mechanism that is being used to issue new bitcoins.
Unlike gold mining, however, BTC’s mining provides a reward in exchange for useful services which required to operate a secure payment network across the globe.
Mining would still be required after the last bitcoin is issued by the bitcoin protocol.
# How does Bitcoin Mining Really Work?
Today, anybody can become a Bitcoin miner, just by running a mining software with any specialized mining hardware.
The mining software listens all transactions and broadcasts them through a peer-to-peer network, that performs appropriate tasks to process and confirm those transactions.
Bitcoin miners perform those tasks, because they could earn transaction fees paid by users for faster transactions processing, and newly created bitcoins get issued into existence miners according to a fixed standard formula.
For every new BTC transactions to be confirmed, they need to be included in a block-chain, along-with a mathematical proof of work.
Such proofs are really so hard to generate, because there’s really no such way to generate them other than, just by trying billions of mathematical calculations per second to be solved.
This requires bitcoin miners to perform those calculations early to their blocks, which gets accepted by the BTC network, and before they gets rewarded.
As more users start to mine bitcoins, the difficulty of finding valid blocks automatically gets increased for the network, which ensure the average time to find and solve a block that remains equal to 10 minutes.
As a result, bitcoin mining becomes a more competitive business, where no individual miner could ever control what is going to be included in the block chain network.
There is a proof of work, which is also designed to depend on the previous blocks to force a chronological order in the block-chain system.
That makes it really difficult to reverse previous transactions, because that requires the re-calculation of the proofs of work of all those subsequent blocks.
When two blocks gets found at the same time, then the miners work on the first block they receive, and switch to the longest block chains as soon as the next block gets found.
This allow mining to secure and maintain a global consensus based network on computer’s processing power.
BTC miners are neither able to cheat by increasing their own rewards, nor they can process fraudulent transactions which could corrupt the entire BTC network.
Because, all those network nodes would reject any block that contains invalid data, as per the rules of the Bitcoin’s system protocol.
Consequently, the Bitcoin network remains one of the most secure network, even if not all Bitcoin miners could be trusted.
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If you do like to learn more details about the bitcoin digital currency, then you can find more information and help on the Wiki FAQ.