Bitcoins and the Advantages of Cryptocurrency
Bitcoin is a digital currency that is created as well as stored electronically. Unlike dollars or euros, they are not controlled by any party. They don’t exist in paper, but are instead produced by persons as well as businesses with the use of software that solves mathematical problems.
Bitcoins and Cryptocurrencies
Bitcoins are the first of an expanding classification of money called cryptocurrency. Traditional currency is based on gold or silver. In theory, you know that if you give a dollar at the bank, you will get some gold in return (although this isn’t actually practiced). However, bitcoins are based on mathematics and not on precious metals. Everywhere in the world, people are using software solutions that work around a mathematical formula as a way to produce bitcoins. Because this mathematical formula is freely available, anybody will be able to can check it. Even the software is open source, which means everybody can pitch in to make sure that it does what it should.
Advantages over Traditional Currencies
Bitcoins can be used to purchase things digitally. In that sense, it’s the same as traditional currencies, which are also traded this way. However, bitcoins offer multiple advantages, including:
The bitcoin network doesn’t come under any central authority. Each machine that mines bitcoins and processes transactions is a part of the network, and the machines all work together. Thus, in theory, no central authority can meddle with monetary policy and set off a meltdown – or just take bitcoins away from their owners. And in case a part of the network goes offline for any reason, the money will continue to flow.
Conventional banks can have tons of requirements, sometimes even unnecessary ones, just to open a simple account with them. Opening a merchant account is just another tedious task made complicated by bureaucracy. In contrast, it only takes seconds to set up your bitcoin address, no fees or questions at that.
Bitcoin accounts are anonymous – kind of. It’s possible to have multiple bitcoin addresses without any of them being linked to names, addresses, or any information that can shed light on your identity. The bitcoin network, however, stores all details of each and every transaction you make in a massive digital ledger referred to as the blockchain. The blockchain knows everything. If you use your bitcoin address publicly, everyone can tell how many bitcoins that address holds. But they’ll have no inkling that it’s yours. There are many steps you can take to protect their anonymity on the bitcoin network, like using different bitcoin addresses for different transactions and not moving a lot of bitcoins to a one address.
Small International Transfer Fees
Transaction fees are negligible when compared to the charges made by banks for global money transfers.
Speed and Non-Repudiability
Bitcoins allow you to send money anywhere, and it only takes a few minutes to process the payment. Lastly, it’s non-repudiable. After your bitcoins are sent, you can’t get them back, unless the recipient sends them back them to you.
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