The coining of digital currencies is one of the most outstanding developments of the 21st century as well as one of the major breakthroughs for the financial world. The battle for the future of money is on with cryptocurrencies being at its forefront. Bitcoin, the most famous and used cryptocurrency and payment protocol, boasts fast transactional speed, anonymity and transparency, along with negligible transactional costs.
So what is Bitcoin?
Bitcoin is a digital cryptocurrency and a new way to transact developed by an anonymous person or group of people calling themselves Satoshi Nakamoto in 2009. It can be understood as a peer-to-peer electronic payment system where currency (also called Bitcoin) is transferred from one party to another instantly and securely with low or no transaction fees. Essentially you may view it as a new smart way of paying for goods and services over the Internet.
What makes it different from conventional currencies?
Bitcoin is decentralised since it is international and not subject to control of any central authority like a large bank or a government.
Unlike conventional currencies Bitcoins are not printed by some central bank. Instead they are “mined” by people who use certain software programs relying on a mathematical algorithm to produce Bitcoins. Once these coins are mined they can be easily transferred using an open-source Internet protocol and not by means of wire transfer or some payment system. Hence, no intermediary is ever needed.
What makes Bitcoin attractive?
It is anonymous. Bitcoin holders are not associated with names or any on-land addresses. They do not need to undergo a tiresome identification procedure when setting up their Bitcoin wallet. All anyone ever needs to know to transfer Bitcoins is a “Bitcoin address” which looks like a string of 27 to 34 characters.
All transactions with Bitcoins may be verified by anyone because these data are in the public domain, stored carefully into a decentralised ledger known as a the blockchain. Blockchain contains transactional details but no personal information. This way Bitcoin combines anonymity with absolute transparency.
Bitcoin is cost-effective. Transaction fees are close to non-existent by design, but also because there are no middlemen charging for their services. This Bitcoin feature is especially topical for international payments and money remittances.
Finally, you are the owner of your account. No bank or payment system can ever tap into it or freeze it. You can access your funds anytime you wish, which makes for one more considerable advantage.