More and more people admit they have somewhere heard about Bitcoin, yet 90% of ones know nothing about this phenomenon. Whether this term carries no meaning to you as well or you’re intended to learn more about Bitcoin technology, our blog writers from Personal Money Service would gladly list down 6 most essential things you have to know about Bitcoin.
So how this technology may be beneficial for you while doing purchases online?
1. What Is a Bitcoin?
Bitcoin (the title consists of two words: bit and coin) is basically a decentralized peer-to-peer payment system, which uses the same name for its “digital” currency. All the operations are performed electronically, so you can’t just print bitcoins because it exists only online.
By now Bitcoin payment technology is the largest in terms of total market value and the major reason is that any Bitcoin transaction is made directly between users, which are then recorded in a so-called blockchain – a public distributed ledger. The security of such cryptocurrency is sometimes even more important than credit card security.
Learn more about the advantages and disadvantages of bitcoin payments.
2. When Did Bitcoin Start?
Bitcoin was initially developed by a Japanese software specialist Satoshi Nakamoto. The person, who claims to call himself by such name, is still unidentified.
By creating such electronic payment system and cryptocurrency, he realized his prime idea about an independent from any central authority currency that exists solely online and operates all of the transactions almost instantly with a minimum transaction fee. The invention was first introduced on 31 October 2008 and released in January 2009.
3. What Are the Reasons to Use Digital Currency?
Bitcoin is used to pay for things electronically just like you can use credit cards for paying off your online purchases with dollars or any other currencies. “Bitcoins” are fully independent of any institution and any bank can’t control the value of this currency.
Therefore, it’s usually referred to as being a decentralized currency. You will need several minutes to create your own bitcoin address for no charge and additional requirements.
4. How Do Bitcoin Transactions Work?
If you wonder what the actual transaction of bitcoins looks like, here’s the precise scheme. The transaction will hold the data who are the input and output (the sender and the receiver) and what is the amount of bitcoins sent to the receiver from the sender.
For sending bitcoins, you’re required to have a bitcoin address and a private key. When the owner of a bitcoin wallet sends money to a wider bitcoin network, bitcoin miners verify the transaction.
5. Are Bitcoins Real?
In fact, no. Bitcoins are no physical objects; they don’t exist, even electronically. Sounds confusing?
Let us explain: the only thing that does exist in reality is records of transactions between several addresses. Each transaction is recorded in a blockchain – a distributed database that holds a list of records called blocks.
Respectively, bitcoin transactions don’t transfer actual currency from one electronic bitcoin wallet to another one, the only thing that matters if this actual record of a completed transaction maintained in the network.
6. Why Should You Use Bitcoin?
Even though this cryptocurrency was introduced to the world not so long time ago and many people treat Bitcoin very carefully, the main benefits of using this virtual currency are quite obvious.
- First, Bitcoin transactions are almost instant and you wouldn’t need to wait until your bank completes the money transfer in several days after your request.
- Second, most of the electronic transactions have minimized payment fees and some of them do not charge money at all.
- Third, no one can take away your currency since Bitcoin hosts a decentralized system with no central authority.
Besides, it’s 100% private and even though blockchains are open for a public eye, but nobody would ever know about the owner of the bitcoin address.