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 aren’t printed on paper, but instead produced by individuals and businesses using a computer program that tackles mathematical problems.
Bitcoins and Cryptocurrencies
Bitcoins are the first of an expanding classification of money called cryptocurrency. Gold or silver is the basis ofconventional currency. 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). Bitcoins, however, are based on mathematics instead of precious metals. In various places around the globe, people make use of software that follows a mathematical formula as part of the bitcoin production process. Since the mathematical formula is available to all, anyone 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 no different from conventional currencies, which are as well tradable via this route. But there are several advantages offered by bitcoins, including:
The bitcoin network is not under any central authority. Every bitcoin-mining machine that processes transactions is part and parcel of an entire network, where all the machines work together. Therefore, in theory, no central authority can interfere with monetary policy and trigger a meltdown – or just decide to snatch bitcoins 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. Setting up a merchant account for payment is yet another bureaucracy-complicated task. In contrast, it only takes seconds to set up your bitcoin address, no fees or questions at that.
There is anonymity with bitcoin accounts – or sort 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. However, the bitcoin network will keep all the details of each transaction you have made in a giant electronic ledger called the blockchain. The blockchain reveals everything. If you use your bitcoin address publicly, everyone can tell how many bitcoins that address holds. But they won’t know that it’s yours. There are various measures you can take to increase their anonymity on the bitcoin network, such as avoiding moving too many bitcoins to a single address and using different bitcoin addresses.
Small International Transfer Fees
Transaction fees using bitcoins are minuscule in comparison to what banks charge for international transfers.
Speed and Non-Repudiability
With bitcoins, you can send money wherever in the world and it will get there in a matter of minutes, provided the network is online. Lastly, it’s non-repudiable. After sending your bitcoins, you can’t recover them, except when the recipient sends them back your way.
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