Bitcoin is a global cryptocurrency and digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi nakamoto. It was released as open-source software in 2009.
It is virtual money
It is a means of payment
It is a good store of value
It is only usable via technological devices and the internet
It is already acceptable by Virgin, Microsoft and soon by Starbucks
In simplest terms, bitcoin is a currency just like the dollar, the Euro, and other traditional currencies. It can be used to buy goods and services, hold value, and do many other things a currency typically does.
Here keep in mind that we’re not talking about just money. We are talking about full fledged money system. Anything can be considered money or cash in theory i.e. precious metals, deer skins, and seashells are historical examples of this. But a money system is more than that. It’s where the money resides. It’s what defines, facilitates, and enforces the very rules of money, such as preventing theft or duplication, or enabling the transfer of the currency. In other words, Bitcoin is more than just the coins. It’s also the system through which these coins are transferred, secured, and validated. So a “money system” facilitates the rules and features of money, but what does it mean to have a “decentralized money system”?
A decentralized cryptocurrency available in digital form. It cannot be kept in our pocket or wallet as that of the physical currencies. Bitcoin is not directly under control of any government or other regulatory bodies as in the case of other currencies. It works on the basis of peer to peer networking strategy meaning thereby, without any server kind of authority to monitor the transactions, it can be sent or received directly interconnecting its beneficiaries all over the world.
How does It Work?
There is a bit of confusion as to how bitcoin works. The process is quite simple.
First of all, you should have a bitcoin wallet installed on your computer or mobile device so that you can have a Bitcoin address. You are free to have all the addresses you want. Anyway, with this address, you can make payments and receive payments in form of bitcoin.
It is more like email, but you get and send payments, not messages. The wallets also have a private key, also called a seed. This private key is used to sign the transactions in order to verify them as having originated from that particular wallet.
Therefore, the transactions cannot be modified by anyone. These transactions are confirmed by computers in the network through a process called mining, and they are made part of the public ledger by being added to the blockchain.
The blockchain is a public ledger that details all the transactions that take place within the network. This system verifies all transactions independent of any single party, therefore ensuring security and transparency. This system is protected using cryptography.
Nobody runs bitcoin; or more accurately, all its have a say in how it operates. This is different from the way regular currencies are operated. With regular currencies, value, inflation, supply and so forth is often dictated by a central authority.
Bitcoin, computers around the world work together to create bitcoins, with the ultimate number of coins that will constitute the bitcoin network set at 21 million. Its value is also determined by the laws of supply and demand.
Being a bitcoin user or trader is very easy. You can join a broker that offers bitcoin trading, open an account and fund it with fiat currency and then use these funds to trade bitcoin. Similarly, you can open a bitcoin wallet, put money in it using regular currency and then use this currency to buy bitcoins and hold it in your wallet.
The other option is using a cryptocurrency exchange, which can give you bitcoins in exchange for regular currency. You can then withdraw this money into your cryptocurrency wallet, where bitcoin and other virtual currencies can be held and used to trade, make payments and do everything else that pertains to the use of a currency.
How Bitcoin (BTC), Cryptocurrency and Blockchain will Change Our Lives
The future of finance is believed to belong to cryptocurrencies like bitcoin. Banking institutions are already starting to embrace the blockchain technology on which these currencies are based as they offer a greater level of security during transactions. People will also take up the use of bitcoin more readily as it offers safer, faster, and a more globally accepted way of making and receiving payments in comparison to the traditional currencies.
As we speak, there are countries where residents are turning to bitcoin due to the instabilities the local currency offers due to political or economic issues facing them.
Even with regard to Internet of Things (IoT), bitcoin and its seminal blockchain technology has something to offer in future. Currently, this system works with a centralized technology, which is susceptible to hacks and other security issues. However, by being decentralized and encrypted like blockchain technology, it will be much safer for everybody.
So yes, bitcoin and blockchain technology will change the future in a big way.
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