What is bitcoin and how does it function?
What is Bitcoin Source: shutterstock.com
For now, experts are not sure what Bitcoin is. We all know that it is a cryptocurrency, but we are still not sure whether it is actual money, a product, or an asset. This topic is currently being discussed by a vast number of experts worldwide.
However, there are so many various Bitcoin wallets now. People use it for internet payments, while exchanges trade it on an equal basis with traditional currency.
So, what is Bitcoin for? The main aim was to avoid government and banking payments controls and create a unique independent internet payment system.
Satoshi Nakamoto is considered to be the “creator” of Bitcoin, but he still hides his real identity, so we don’t even know whether Satoshi is a one-man or a team of developers. There are 21 milloin Bitcoins encrypted in the protocol. Bitcoin is not physical since its production and further circulation are fully digitized. Anyone who desires can mine Bitcoin at any time. However, every subsequent version requires more and more powerful mining equipment.
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What you should know about Bitcoin:
Decentralization – Bitcoin is not controlled by any bank or government. There is no institution that can affect virtual currency payments.
Anonymity – Bitcoin payments are not authenticated. That means all the system knows about you is your wallet number. Nevertheless, this feature also allows fraudsters to use Bitcoin for illicit drugs and gun trafficking.
Speed and cost – Bitcoin transaction processing is carried out faster, while it is several times cheaper.
Transboundary – Bitcoin payments have no limits. You can transfer money anywhere in the world.
Safety — A payment cannot be canceled, because all transaction data is transferred to special blocks (ledger), which can’t be changed or deleted. And if a user has forgotten his wallet password, it is too bad for him/her. “Forgotten password”, unfortunately, means “lost Bitcoins”.
Volatility — Cryptocurrency is one of the most unstable markets. At various times the Bitcoin price has fluctuated between almost $0 and $20000.
Limitations — The network allows around seven transactions to be performed per second.
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