Bitcoin is a cryptocurrency, a form of electronic money. It is a decentralized digital currency free from banks and can be sent from user to user on a peer-to-peer bitcoin blockchain network without intermediaries. Over the years, Bitcoin has influenced thousands of new types of cryptocurrencies based on its technology. Bitcoin has also become popular as an asset class due to its value. This guide is for you to know how bitcoin works, how you can get it, and why you should use it without any technical details.
How does Bitcoin work?
Bitcoin is built on a distributed digital record called a blockchain. Blockchain refers to the format after which many cryptocurrencies verify that the payer is the legitimate owner of the coin. It does this by placing a ledger on each currency’s movement when transferred to the new owner. The approval of each transaction also ensures that the movement is in accordance with the network protocol.
All independent nodes have access to ledgers that have information about who owns the coins at any given time. Each transaction or data packet is called a ‘block .’ The ledger can connect them in chronological order. Thus ‘blockchain’ became synonymous with bitcoin, as it uses blockchain methods to keep the system transparent and honest.
Why should I use it?
Now that we have a brief overview of what bitcoin is, we can better understand how this well-known cryptocurrency offers potential benefits to its users.
What are the benefits of Bitcoin?
Fast and Inexpensive
It only takes a few minutes to send any money regardless of the amount or destination. Going to another part of the world through your bank can be very expensive. When done in bitcoins, the cost is either negligible or non-existent. Bitcoins can be sent to any nation on the planet. Bitcoins, such as the Internet and email, have no geographical boundaries.
The right to pay is the essential benefit that bitcoin investors get from participating in the trading market. They can send and receive Bitcoin payments anytime, anywhere, and without restriction.
Bitcoin has user autonomy.
Traditional fiat currencies are subject to several restrictions and risks. For example, banks are booming in the economy. Sometimes, these situations can end in bank runs and crashes, as has happened many times. It means that consumers are not really in control of their money. Theoretically, bitcoin promises user autonomy because its price is not tied to specific government policies. It means that consumers and owners of cryptocurrencies have control over their money.
Bitcoin payments are mobile.
Like many online payment systems, Bitcoin users can pay for their coins anywhere they access the Internet. It means that buyers do not have to travel to a bank or store to buy a product. However, unlike online payments from US bank accounts or credit cards, personal information is not required to complete any transaction.
Bitcoin transactions are secure.
Bitcoin is not a physical currency. Therefore, thieves can’t remove it from the holder. Hackers can steal someone’s cryptocurrency if they know the private keys to the wallet. However, with adequate security, bitcoin theft is technically impossible. Although there are reports of hexes in cryptocurrency exchanges, the bitcoin exchange is immune to such violations. Therefore, transactions between two (or multiple) addresses are safe.
Since users can only send and receive bitcoins from a smartphone or computer, bitcoins are theoretically available to the consumer population without access to traditional banking systems, credit cards, and other forms of payment.