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A Beginner’s Perspective on Bitcoin

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Written by   32
1 month ago

So we talked about Satoshi in my most recent article about cryptocurrency. I hope I it was helpful. Now I would like to share with you my own understanding of what Bitcoin is. I have mentioned about who made it so let us talk about what he made-what Satoshi Nakamoto made.

Bitcoin according to Bitcoincash.org , "is an innovative payment network and a new kind of money, it uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. It is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system." In simple terms, it is an electronic cash that is built upon a decentralized system, but wait what does decentralized even mean? It means that there is no single person or group of people that get a hold on the transaction that happen in that system. Everyone who wants to be a part of that said exchange will have an access to the ledger that has all the transactions that was, are and where to be made.  That ledger is called the blockchain. Now you might even wonder why it is called that way, the reason for that is each lists of transactions forms a block and each block is linked together to each other-more of like a literal chain. It is important to know that Bitcoin was the first ever digital currency that solved the problem of double spending. Double spending occurs when someone tries to use an amount of money to purchase two kinds of product. Bitcoin has been built on a system where it would verify a certain transaction through a hash function SHA-256 and it will then generate one unique hash to confirm that transaction. The first transactions that gets verified first gets the confirmation and is the deemed a successful transaction. For example, if I buy a pizza using 1 Bitcoin and then I try to buy a drink using that same Bitcoin, as I send that bitcoin from my wallet, whichever transaction is verified first, will be the transaction that's going to be honored by the system, making the other one an invalid transaction (it's a complex process for me to understand but at least that's how I get it).

 

Speaking of pizza, did you know that the first ever transaction made using Bitcoin is to buy two Papa John’s pizzas? In 2010, Laszlo Hanyecz purchased those pizzas using 10,000 bitcoins- which cost the equivalent of hundreds of millions of dollars today, making Laszlo a multi-millionaire if he hadn’t bought that pizza and kept his bitcoins.  Laszlo, in one of his interviews, was asked if he regrets it, and he said no, for him it is an honor to be a part of the early history of Bitcoin. Such a yummy history about the beginnings of Bitcoin, right? And look at where it is now, it continues to rise in value! At the time of this writing, one bitcoin now is worth $62,235.06 USD.

 

Now, let me highlight a term that I have mentioned above-decentralized. In my own opinion, this term has caused why the invention of Bitcoin is a breakthrough. Here is what I think, for a hundred of years the money system has always been centralized, which means that there is a central office that makes, holds and manages it-the bank. The bank is the central authority that oversees all the transaction was, are and ever will be made. You can not just come up to a specific bank and say, “Hey can I see the ledger? “or “Can I see the transactions for today?” Nope. Can’t do that. Or else you will be behind bars. Also, the banks make sure that there is no double spending (I mentioned what double spending is above). So, just like the purchase of a pizza and a drink in above’s example, the bank makes sure that someone does not purchase two items using same amount of money. For hundreds or even thousands of years banks as the central processing offices of the money system, I think, has been controlling the money system. Since the ledgers or the records of transaction are not available to the public, there is a great tendency that transactions can be manipulated by corrupt people who are in the authority. One example of this corruption is the Wells Fargo account fraud scandal, where millions of fraudulent savings and checking accounts are made on behalf of Wells Fargo clients without their consent. I think that is just a tip of the iceberg. There could have been many fraudulent acts like this that were undiscovered, which makes us feel thankful that Satoshi invented that “Peer-to-Peer Electronic Cash System” it is transparent, decentralized and most of all it has no boundaries. When I say no boundaries, I think of those people whose life circumstances are determined by the kind of life that they are born into. We have friends form other countries who even despite the skills and abilities that they have cannot improve their financial situation due to a predetermined class or social rank that they belong to. If you have heard of the caste system, you know what I mean. Bitcoin with its peer-to-peer nature provides freedom to those who are under that system. The more people know about this transparent and borderless electronic cash, the more people are given the opportunity to financial freedom because many sites (like read.cash) allow someone to earn bitcoins and its other forks, which when totaled can be a good amount of money enough to buy your stomach a decent meal. Cant help but be continually grateful for this P2P Ecash System.

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Written by   32
1 month ago
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