What is Bitcoin About
What Is Bitcoin About?
This is one of the most frequently asked questions in the world right now. To make it simple, Bitcoin is a digital version of money where the transactions are done online.
“It is a medium of exchange just like your normal everyday currency such as the USD, but designed for the purpose of exchanging digital information through a process known as cryptography”.
What this means is that these transactions don’t need validation from the banks or the government to work or thrive, due to its decentralized nature. The digital transactions take place directly between buyer and seller without an intermediary, such as a bank, to collect and distribute funds. The transactions are recorded in a distributed ledger called a blockchain.
This blockchain technology may be the most important single development since the invention of the internet itself. So, what is Bitcoin about? Well, it’s going to change the way business gets done, how documents are exchanged, how real estate is sold and registered, how stocks and bonds are tracked, how inventory is managed and how people transact their financial affairs. It’s going to be a game changer.
Bitcoin has certain rules, also known as the Bitcoin protocol, which makes it work. The ingenious part of Bitcoin is not necessarily the creation of the currency but rather the creation of the Bitcoin protocol.
Bitcoin successfully found a way to build a decentralized digital transmission system which means the network is powered by its users without having any third party, central authority or middleman controlling it. Neither the central bank, nor the government has any power over this distribution system.
History Making Technology
After decades of over-regulation and central bank meddling, the financial markets are anything but free. The problem with a centralized network in a payment system is that it’s done by a central server that keeps track of your balances and they charge you expensive transaction fees for the ‘pleasure of doing business‘ with them.
Now this oppressive government controlled system has reached a tipping point. For the first time in history, technology makes it possible to transfer ‘property rights‘ (such as shares, certificates, digital money, etc.) in a fast, transparent and very secure way regardless of acceptance or approval of governments or the participation of traditional banks.
The first ever-successful cryptocurrency (Bitcoin) emerged from the invention by Satoshi Nakamoto. This was then followed by other types of crytocurrencies competing with Bitcoin.
Fast and Secure Transactions
These types of blockchain transactions are fast, secure and global. Transactions are actioned immediately in the network and are confirmed within minutes. Since the transactions are managed by a global network of tens of thousands of computers, your physical location is not relevant. It is possible for you to transact with someone in your immediate vicinity, or living on the other side of the world.
You have more control over your account and your financial affairs. That’s totally secure due to the decentralized network of peers which keeps a consensus on account balances and the transactions made.
Compared to a traditional bank account, which is controlled by people you don’t see and governed by rules you don’t even know exist. Plus the fact that your typical bank account can be frozen and your money seized by any government at any time.
The ability to make anonymous transactions using cryptocurrency is especially appealing to anyone wishing to preserve their privacy and it also gives everyday people the ability to store wealth online. In a way, that your money is ‘close’ enough to you – but far enough away from the greedy hands of any government or its agents, because in essence, its invisible to them.
How it Works
This short video (below) gives you a quick over view of how Bitcoin works
Apart from Bitcoin being the first ever decentralized peer-to-peer network that is powered by its users without requiring any central authority. It is the pioneer of the Blockchain Technology that made digital money possible and is the gold standard in the cryptocurrency network.
Thanks to this blockchain technology, you have ultimate control over your money and your transactions are safe and very secure without any unnecessary costs on monetary transactions and you have the advantage if you are a seller, that these transactions are impossible to be tracked or reversed.
Your transactions are practically immune from any influence of your government and its manipulation. So, it is possible to be able to pay and receive money anywhere in the world at any given time. The transaction is done with minimum processing fees, thus preventing users having to pay extra charges from banks or other financial institutions. Nor are they subject to capital controls or export restrictions (where the government try to control what you can do with your money)
Bitcoin can be spent for different purposes and all transactions are completed securely online. There are at least three different transactions that can be performed when using cryptocurrency:
- Bitcoin Trading
Bitcoin can be used to buy other cryptocurrencies and for trading which can be very profitable for both professionals and beginners. The market is new, where arbitrage and margin trading is widely available. The currency’s high volatility has also played a major role in bringing new investors to the trading market.
- Personal Spending
You can use Bitcoin to purchase almost anything! From buying cars to travelling the world. The number of merchants accepting Bitcoin exceeds 150,000 and includes firms like. PayPal, Mircosoft and Dell
- Crowd Funding
Cryptocurrency also provides the chance for you to make personal financial investments. How? By crowd funding. You are able to be part of someone’s success story by investing directly in a crypto crowd funding project.
There are well over a 1000 other cryptocurrencies but Bitcoin is the first ever cryptocurrency invented and remains by far the most sought after cryptocurrency to date.
Over the years Bitcoin’s value has risen tremendously from almost zero to over $5000 per bitcoin to date. Its transaction volume has also reached 250,000 daily transactions.
One major advantage of Bitcoins is that it is impossible to counterfeit or inflate. The reason being there are only 21 million Bitcoins created for mining and at current mining rates, it is predicted it will take until 2140, before all the Bitcoins will be mined.
Lower Risk Than Traditional Currencies
Another prominent advantage of Cryptocurrency is the risks are much lower than using traditional currencies. Most people rarely carry much cash with them, instead, they have credit cards, debit cards and other payment cards available as their perferred method of payment.
Nothing’s wrong with that, except that the thing about these cards is that any purchase you are making, you are giving the end-receiver, access to your entire credit line and private information.
No matter how small the amount of the transaction you have a security breach as a third party has access to all your private information.
Now mostly this ‘breach’ is considered safe because of measures like ‘PIN enabled’ or ‘Pay wave’ methods and charge backs etc, but it still relies on trust. The store or entity initiating the payment does so by ‘pulling’ the designated amount from your account after reviewing the information provided via your card, which is a lot!
No Third Party Involvement
Cryptocurrency doesn’t work that way. There is ‘No Third-Party Involvement’. Instead of ‘pulling’, it ‘pushes’ the amount thats needed to be paid or received, to the other party, without any personal /private/ credit information being required or accessed.
With blockchain the payments are possible without your personal information being tied back to you for the transaction to occur. Your account information is encrypted to ensure the safety of your money and your privacy. It doesn’t rely on ‘trusting’ any third party to not misapporprate your information.
You probably now have an idea on how Bitcoin works and why it is currently trending. The market of cryptocurrency constantly fluctuates and nearly every day new cryptocurrencies emerge and some might even disappear. Some investors will get lucky and some may lose their initial investment.
Yes, the cryptocurrency market is unpredictable and posses risks for would be investors. But many experts are predicting that Bitcoin is here to stay and it is already making an impact in the world of finance.
Many institutional investors are now investigating the potential purchase of Bitcoin, which will no doubt lead to a massive upswing in its price. Banks and governments are also starting to acknowledge the potential that cryptocurrency and the Blockchain technology holds.
There are already a lot of people buying Bitcoin in preparation against the devaluation of paper backed ‘fiat’ currency.
In Asia especially, the Bitcoin market is flourishing. (Despite recent attempts in China to shut it down [Sept 2017] which temporally saw the price fall, only to recover and break new price levels – see graph above). Instead more and more companies are seeing the effectiveness of the blockchain technology which is rapidly gaining acceptance for its powerful security network.
Cryptocurrency is definitely an investment vehicle worth looking out for. It is no doubt growing in use and acceptance and one day soon, it may emerge as the currency of the future!
To learn more about how to buy Bitcoin with cash or, Credit Card, PayPal, Bank Transfer, or any other payment methodology and currency you desire (well almost). I step you through the process and show you how to open accounts and which ones to use that give you the most freedom and flexibility. Visit my post ‘How to Buy Bitcoin with Cash‘
|How to Buy Bitcoin with Cash‘|
To learn more about the many other types of Cryptocurrencies that are available and why they may be a good way to protect yourself from the wealth-destroying policies of governments and central bankers. Also with more than 1000 different Cryptocurrencies now available, finding the ‘right‘ ones can be a daunting experience. You may like to visit my post ‘What is a Cryptocurrency’
|‘What is a Cryptocurrency’|
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