Cryptocurrency has become a huge part of today’s world. But what is it really?
What is Cryptocurrency
Cryptocurrency, or otherwise known as crypto or cryptocoins exist only in the digital world. Bitcoin and other cryptocurrencies are powered by the blockchain technology and they don’t have physical representations, i.e., paper bills, coins, check, etc. Among other popular cryptos include Bitcoin, Litecoin and Ethereum. They all operate under a single principle, which will be discussed in more detail below.
Bitcoin – The Most Popular Cryptocurrency
Bitcoin is undoubtedly the most renowned crypto out there, but ever since cryptocurrency’s emergence in 2009 there have been many others with varying features and uses. For example, we have Litecoin and Ethereum-based crypto coins that have their own programming language.
Some cryptocoins are more valuable than others, but as of the moment the Number 1 cryptocurrency is Bitcoin. It leads by usability, price and ownership. And why not? Bitcoin has become the face of the cryptocurrency industry because it was the first mass-market cryptocurrency of its kind.
How popular is it? People know of Bitcoin and not much else. There’s a growing number of stores and online shops that accept Bitcoin as payment. There are Bitcoin ATMs popping up all over the world. Currently, cryptos such as Dash, Monero, Ethereum, Litecoin and Ripple are trying to get a share of the burgeoning market and are backed by major financial organizations.
How Does Bitcoin Work
As mentioned, these digital currencies make use of a technology called blockchain, an online database that has a record of all transactions made ever since cryptocurrencies were born. Blockchains are decentralized, which means they aren’t stored on any given server and therefore is quite impossible to hack. Think of it as a cloud-based ledger that has a record of all bitcoin transactions ever made.
Bitcoin transactions are checked more than once before they get approved and posted on the blockchain. The secure payment platform makes Bitcoin all the more appealing because they’re secure and virtually hack-proof. Cryptocoins are stored in digital wallets with a digital address on it The “address” is made up of a complex code of letters and numbers. Transactions are made via transfer of Bitcoin from one cryptocurrency wallet to another. To access the ‘Wallet” you’ll need an app or a special ‘Wallet” hardware that you can access to see how much you have and the history of transactions made. Lost digital wallets can be retrieved via a unique code or pin number that’s assigned only to you
Bitcoin transactions are usually irreversible. You won’t be able to get a refund because of its decentralized aspect. For this reason it’s best to double-check transactions and wallet addresses before you hit “Send”.
Bitcoin Advantages
1. Extremely Divisible
Bitcoin’s smallest denomination is a “satoshi”, and it’s about a hundred millionth of one Bitcoin. Using satoshis, one can opt for microtransactions down to the smallest cent which is something that traditional money isn’t able to do.
2. Absolute Immutability
Bitcoin transactions are irreversible, which is totally different from fiat transactions. The reason for this is because there’s no central authority or arbiter; if the transaction has been recorded in the ledger and an hour has passed, then it’s more or less a permanent transfer of cryptocurrency. This cements the fact that Bitcoin is a secure form of online payment and that modifying, or hacking the amount is next to impossible.
3. Completely Anonymous
Traditional electronic payment system usually require a form of authentication to satisfy various legislation and anti-money laundering laws, but Bitcoin doesn’t have that. In theory, Bitcoin users operate in anonymity. There’s no central authority from which transactions pass through, and Bitcoin holders can send or receive payments without having to complete identity checks.
So how are transactions authenticated? A request to send or receive payment is done; the internal protocol checks to see if there were previous transactions made before the current one, if the sender has enough Bitcoins and if the wallet address is correct. There’s no part where you’ll need to send proof of identity for the transaction to be completed.
In strict terms, your wallet address will be your sole identity if transactions needed to be tracked. In exchanges, the Bitcoin network is transparent and everyone will be able to see transactions come and go.
4. Limited Supply
Centralized money and fiats such as the dollar, the yen and the euro has an unlimited supply. Banks can issue infinite amounts of money and manipulate its value relative to the other ones. Holders and citizens can just stand, watch and bear as the costs ebb and flow.
Bitcoin is tightly regulated all the time The supply is controlled by the underlying electronic algorithm. Small amounts of Bitcoin may be mined each hour, but it continues at a diminishing rate until a total of 21 million Bitcoins have been reached. The exclusivity of Bitcoin makes it appear more desirable as compared to traditional fiat. Basic economics state that when demand grows and the supply is the same, the value of the commodity goes up.
5. 100% Decentralized
Perhaps the most defining feature of Bitcoin and other cryptocurrencies is that they are all decentralized. There’s not one local or international institution who controls the network. In fact, the system is very much open and is run everyday by a group of volunteers spread out on computers located all over the glob. It’s a form of money that caters to individuals who dislike the idea that governments and large banks control the world’s currency.
There’s no double spending when it comes to Bitcoin and cryptocoins in particular. The blockchain technology eliminates this specific issue via a combination of economic incentives and cryptography. Banks are usually the one tasked to do this but it gives them more control over the money in particular. With Bitcoin, each transaction is checked in an open network that isn’t owned by anyone.
Buying Bitcoin
Bitcoin can be mined using a specialized machine or bought online. There are popular currency exchanges out there that you can use to buy Bitcoins, i.e., Coinbase, Kraken, CEX, etc. You’ll have to create a virtual wallet that has a unique wallet code, then use money from your Pay Pal account to buy Bitcoin using traditional flat currencies.

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