Why We Should Hold Cryptocurrencies? How Bitcoin Works?
A few years ago, people would have heard something called the ‘Bitcoin’ cryptocurrency being created in 2009 by an unknown person called Steve Wozniak. However, it was not until 2010 – when Bitcoin began trading on Wall Street that the world began to realize its potential and become interested in this new currency. This paper will explore what cryptocurrencies are, how they are used and whether or not they should be banned or regulated.
What is Bitcoins?
A bitcoin is an electronic form of money that has been created from the invention of bitcoins and other cryptocurrencies back in 2009. The first known use of bitcoins was in 2008 and by 2012 it had grown into one of the most valued currencies. According to CoinMarketCap (2012), 1 billion bitcoins were sold in 2013, increasing the value of these currencies by almost $10 trillion. The number of coins traded at any given moment is always changing and the current market cap of digital currencies stands at around 17.6 trillion coins (1).
How Are Bitcoins Used?
The use of bitcoins can vary dramatically. It is mostly used as a means in transactions for various goods and services. To start with, bitcoin is used for payments which require no physical cash. Some examples of this include the credit card and online banking systems. Additionally, bitcoins have been used as one of the greatest ways of reducing costs across all industries. For example, businesses use bitcoins to make payment processing easier and more accurate. Other examples of such applications include the issuance of certificates of ownership from banks and even real estate companies that want to make sure their property is secured using some sort of encryption. The use of bitcoins also allows customers to conduct transactions without making payments which saves them time and costs. If users do not receive their payment within a specific date, then they can choose to settle accounts using bitcoins that have already been sent.
How Should Bitcoins Be Regulated?
Bitcoin has been greatly abused by political activists and criminals alike. Although many people like the fact that they are decentralized in nature it does mean that there is no central body overseeing any part of the system. These individuals who control and manage such systems have the power to create a single coin that may make it difficult to predict who is going to be able to pay or who is on his/her way out of the system. As such, unregulated bitcoin may lead to exploitation of the system for illegal activities and possibly to death of innocent people who may be dependent on the blockchain system.
The Use of Bitcoins and Their Usage (Pseudonymity)
The majority of bitcoin transactions involve use of a unique pair of keys – public and private. Public keys were derived from well-known organizations and other institutions while private keys came from individual users. When you generate your first wallet then you need a private key and public key so that you can sign yourself up for any kind of service using your chosen type of account. Many people get confused by the idea that they can use two different types of private and public keys because in reality you can only own one public key while you can use multiple public keys for various transactions. Public keys are used to authenticate yourself and access important information about what happens behind the scenes. On the other hand, if you need to hide the identity then you need a private key or mix several different secret codes. In addition, the process of generating bitcoin involves combining numbers between 0 and 1 – the system of cryptographic algorithms has been credited as the only system used to generate bitcoins.
How Much Does BTC Cost?
The cost of creating bitcoin comes in five different ways. There is a fixed amount of Bitcoins created every quarter – it will stay constant over the next year and then slowly decrease from 4 billion Bitcoins in December 2016 to 3.8 billion Bitcoins in January 2017. While Bitcoins are free to anyone and have no limits they still have limitations. People can only trade them directly and cannot issue, sell or finance Bitcoins in any manner. Bitcoins can only be spent using their coinbase. Once this limit is reached then the rest of bitcoin is considered lost. Bitcoin users must maintain this balance by locking their private wallets. A user may lock a bitcoin wallet at home, on a coffee table, in their office, at school etc. This method of protecting bitcoins requires a significant investment on average. Every third to sixth week a large sum of Bitcoins is locked onto a hardware device that has a built-in battery. At the end of each month the device automatically discharges itself. Before this happens the Bitcoin is stored in an Ethereum wallet. Such devices are expensive compared to traditional computers but the fact that this security is available makes it quite hard to attack.
Why Do I Need Bitcoins? Why Should I Invest?
Bitcoin is mainly useful for a few purposes. They are extremely easy to carry everywhere because they are electronically-signed and virtually useless without this signature. Another reason why people choose to invest into bitcoins is the ability to anonymously transact information. Bitcoin enables anonymity and protection against fraud. A simple example is a transaction conducted using bitcoins. The sender gets the benefit of anonymity, while the receiver, in some cases, loses nothing – the Bitcoin that the recipient received. Furthermore, bitcoin is very effective in terms of speed – it can be delivered anywhere within minutes. The system of computerized checks has also made cryptocurrencies highly desirable for transactions. Lastly, the ability to use bitcoins to purchase other currencies and obtain additional benefits has made this a good option for people.
The Most Dangerous Applications of Bitcoins
The worst application of bitcoins is theft because bitcoin networks, even when encrypted, are easily accessible as any human can view a node from any room. Because bitcoins have no official backing – none of the banks have backed Bitcoin. All they ever protect is their reputation and reputation – there is no guarantee that their transactions are correct. Even worse, it is possible to copy the data involved in those transactions, hence stealing a considerable amount of Bitcoins without revealing it to anyone.
How Do We Protect Against Potential Loss of Savings?
To avoid loss of all savings in case of the disappearance of bitcoins they have to be insured. One method of guarding against this risk would be to establish a centralized bank where the funds deposited are safe. Each bank would keep sufficient bitcoins under watch, with adequate insurance funds set up to cover any losses occurring. Also, it is very important to ensure that all Bitcoins are secured – it is much better and much cheaper to store Bitcoins in cold storage than to lose them because hackers could find a way in to retrieve the bitcoins.
What Kinds Of Digital Currency Should Be Banned?
There are several kinds of digital currency: gold coins, bitcoin, ether, microtron, litecoin, XRP, and others. Gold coins are widely considered the best form of cryptocurrencies because they are rare and come from a precious mineral found in the planet earth (Goldman Sachs Group 2012). Bitcoin is second in popularity because they come from many sources and have great variety of uses. Ether on the other hand is similar to bitcoin but it does not come from precious metal, instead comes from a series of blockchains which were discovered in 2011 by researchers at Washington University and Stanford Hospital (Bitcoin Mining Economics 2011). Lites are less common than bitcoin or coin and are based on natural elements, especially carbon and hydrogen, unlike the latter. Tron on the other hand is a fairly recent technology, was invented by Elon Musk and introduced into the market in late 2014. It is very similar to bitcoin but without the precious metal. Microtron is also a newer technology compared to bitcoin and is made using specialized chemicals and not gold. Moreover, although bitcoin mining machines make bitcoins, you will never know when it mines bitcoins. Finally, XRPs are the latest kind of digital currency. It is closely related to bitcoin and comes from a collection of cryptocurrencies named XRP. The main difference between them is that while BTC miners produce bitcoins, XRP miners mine XRP. Therefore, if either miner loses the game the whole network will die down as both holders will lose more than $50 million. Thus, the risk of losing a digital asset is higher than losing a coin.
What Happens If Bitcoin Goes Beyond Its Value?
In a situation where bitcoin goes beyond its value, the following factors will occur: First, the price of bitcoin will drop; second, the financial condition of the country that produces this currency will deteriorate; finally, people will stop buying and spending bitcoins. Since now there are fewer bitcoins and they are being produced less often it is a possibility that the value of bitcoins is expected to go down faster.
Bitcoin’s Effect on the World Economy
Although bitcoin has not yet turned over 25% of its net wealth; it is estimated that the total economic impact of bitcoin will be $2–3 trillion. Withdrawal of bitcoin was estimated at 7 billion dollars per day. This amount is equal to more than half of US GDP. With bitcoin becoming less valuable then the economy will slow down causing unemployment rates to rise. The currency’s fall will affect global growth and cause inflation. Due to increase in prices and wages and scarcity, the supply of labor will reduce and this will drive prices up even further. On top of all these there are reports that bitcoin will make almost $1 trillion by 2024 and since this currency acts as a deflationary currency the exchange rate will decline (Spencer et al. 2015).
Bitcoin’s Positive and Negative Effects on Global Businesses
There are many positive effects of bitcoin and they are numerous and diverse. Firstly, bitcoin has reduced the cost of sending money, enabling business people to send money very quickly. Secondly, small players are getting into the sector and now enjoy greater revenue than before. Thirdly, bitcoin allows companies like Uber and Lyft to save on fuel costs as they can accept and move money on any platform and even exchange it for another currency within the same country. Fourthly, bitcoin is highly.
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