What Is Bitcoin ?

What Is Bitcoin

Bitcoin is a cryptocurrency and worldwide payment system. It is not controlled by any institution or government, but exists as an open-source software.

Bitcoin first saw the light of day in 2008 when a person using the name Satoshi Nakamoto published its white paper. Bitcoins are created through a process called mining, where users offer their computing power to verify and confirm transactions on the Bitcoin network.

For this service, they are rewarded with bitcoins over time - currently 12.5 bitcoins every 10 minutes.

Bitcoins are stored in a digital wallet and can be used for payments, because a person's identity is not attached to the transactions.

On the other hand, transactions on the Bitcoin network are only published but not identified. This means people's identities are protected but also that there is no way of tracking payments. It's a bit like sending cash digitally - anonymous and untraceable.

A person looking to make a payment on the Internet today has two options: pay via credit cards or online bank transfer, where their transaction is traceable and also verified by an intermediary (a bank).

What is Bitcoin and how does it differ from the rest of the cryptocurrencies?

It's a decentralized digital currency. While centralized currencies are issued by the central banks. Which are considered as the most trusted institutions in the world, having their reputation at stake. Whereas, in case of decentralized currencies like bitcoin, there is no third party involved, which makes it reliable and trustworthy as well as transparent

Bitcoins can be used to make purchases from any companies that accept it and also can be traded for real cash on different exchanges.

Forex merchants remain a popular option for investment purpose globally. But bitcoin has introduced an innovative idea of digital currency that is completely changing the way people think about money and online transactions.

What sets it apart from other crypto-currencies like Litecoin, Peercoin, Namecoin and Feathercoin?

There are many cryptocurrencies in the market today. Each of them has its own unique features and for this very reason, people tend to opt for bitcoins. Similarly, bitcoins have different qualities that make it stand out from the rest. There are some factors that make bitcoins stand out from the rest and these are as follows:

1. The most sought after digital currency: Bitcoin has been one of the most sought after digital currencies due to its features. It is an open source peer-to-peer currency which means no central institution is controlling or regulating it. The bitcoin transactions are completely transparent and irreversible after the coins are received.

2. Fast and cheap: There is no need to wait for days to receive bitcoins. As they give instant results once you have made a transaction by using the bitcoins in your wallet. The transactions are fast compared to other forms of transaction made online.

3. No risk: Bitcoins can be exchanged like any other currency without having to worry about the security of your wallet or losing your money in case of an accident, fire, theft or hacking etc.

4. Versatile: Bitcoins can be used to make payments and purchases from anywhere in the world, as long as you have an internet connection. Be it groceries, flights or even a movie ticket.

5. Watch and trade: There are many bitcoin exchanges in the market today where one can not only trade bitcoins but also buy and sell them if they intend to invest in bitcoins. These platforms have real time graphs, where the values of bitcoins change with each passing second.

6. Public ledger: In case of normal currencies, the transactions are not transparent and it is very difficult to keep track of them. However, in case of bitcoins, all the transactions are on a public ledger and can be tracked easily by anyone at any given time.

7. Availability in different denominations: You need not buy whole bitcoins. They are available in smaller denominations like bits - 8 decimal places which is 0.00000001 BTC; mbits - 20 decimal places which is 0.000001 BTC; ubits - 40 decimal places which is 0.00001 BTC etc.

8. Bitcoin can be used for speculation: You can also purchase bitcoins as a present for someone and then wait for the value of bitcoins to rise. This is also known as "hodling". It is an effective way of investing in bitcoin and boosting its value in the long run.

9. Widely accepted: Bitcoins have gained a lot of popularity recently and are being accepted by many online stores, banks and payment services all over the world. It is becoming an integral part of e-commerce in various countries around the world like China, Japan etc.

10. Public interest: Bitcoins are held by people around the world and not just a few individuals. And this has resulted in increasing the value of bitcoins hence making it more attractive for investors.

11. No processing fees: When you exchange bitcoins for cash, your digital wallet will process the transaction for you at no extra cost i.e, it will charge you a fee that covers its processing. However with bitcoin exchanges, like Coinbase, there are no fees to make the transaction and the exchange rates they provide are very competitive in comparison to other companies that offer similar services on the web

12. Different coins: Unlike many other cryptocurrencies where they are available only in one denomination like bitcoin, Litecoin etc. Bitcoins can be bought in different denominations like bits, mbits, ubits, etc. This makes it a versatile and easier to use currency than many other digital currencies.

13. Minimal transaction cost: Unlike the other currencies which depend on bank fees, once you have bitcoins and a bitcoin exchange you can make payments online for free.

14. Location independent: Since bitcoins are not tied to any country, their value is not affected by the economic and political conditions that prevail in any country around the world making them an ideal choice for people who like to travel a lot or are financially independent of any form of control or monitoring from other people near or far away from them.

15. Perfect for micro-transactions: Due to the nature of bitcoins, they are more suited for smaller transactions compared to other currencies. This is because they are not controlled by any bank or institution making them averse to large transactions which would attract higher charges and make the bitcoins less suited for small or micro-transactions.

16. Security: Since bitcoins are stored in your digital wallet and not in any third party wallet or online service, there is no risk of getting hacked or losing your money in case of an accident like fire, theft etc where all your money is at risk unlike real cash which you keep in a bank where it is safe and secured until the bank gets burnt down.

17. Transfer of value: Due to their decentralized nature, bitcoins can be transferred from one person to the other directly without any middle person like a bank or payment service. This means that their value is not affected by factors like international or national sanctions that are imposed on people or countries.

18. Better than gold: One must understand that bitcoins are different from gold. Although they have similar features, they also have some differences. Bitcoins will never be rarer than 21 million which makes its supply limited while gold is scarce and hard to mine and so its supply is limited but will never be limited hence making it better than bitcoin when it comes to scarcity and rarity of the product.