Do you know what is Bitcoins, If NO then Learn what is Bitcoins from this ultimate guide 2020. If you want to better understand the concept behind then stick to this post till the end.
You will also learn what is Crypto Currency, is it a new form of currency out there? Your all questions will get answered here.
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We are focused here get understand what is Bitcoins and it’s types and any associated prons and cons.
In this Article
What is Bitcoins?
Bitcoin is a cryptocurrency, a form of virtual money. It is a decentralized digital currency without no bank system and can be sent from user to user on the peer-to-peer encrypted bitcoin blockchain network without the need of any intermediaries.
The management of Bitcoins cryptocurrency is decentralized, it works in a distributed manner unlike the normal banking systems.
Bitcoins are not physical and only exist in the digital world! That’s why Bitcoin and other cryptocurrencies are often called digital currencies or virtual currencies.
How Bitcoins Works?
The creator of Bitcoin made three main concepts for Bitcoin that are essential in understanding the principles of Bitcoin:
- Cryptography
- Decentralized Networks
- Supply and Demand
Bitcoin’s Transactional aspects:
- Secure: Bitcoin funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency. Strong cryptographic technology and the magic of long numbers make it impossible to break this scheme.
- Fast and global: Transaction is propagated nearly instantly in the network and are confirmed in a couple of minutes. Since they happen in a global network of computers they are completely indifferent to your physical location.
- Irreversible: After confirmation, a transaction can‘t be reversed. By nobody. And nobody means nobody. If you send money, you send it. No one can help you, if you sent your funds to a scammer or if a hacker stole them from your computer. There is no safety net.
- Pseudonymous: No transactions or accounts are connected to real-world identities. You receive Bitcoins on so-called addresses, which are randomly seeming chains of around 30 characters. While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect the real-world identity of users with those addresses.
- Permissionless: No permission is required to deal in Bitcoins. It‘s just a software that everybody can download for free. After you installed it, you can receive and send Bitcoins or other cryptocurrencies. No one can prevent you from transacting with your own money. There is no gatekeeper.
What are the Advantages and Disadvantages of Bitcoin?
The Advantages of Bitcoin
- Fees are low
- International payments are a lot faster than banks
- Blockchain — near impossible to hack
- Decentralized — cannot be shut down at a single point<
- Transparent — you don’t have to trust anyone
- Anonymous — you don’t need to use your name
- Powered by the community — the fees are shared instead of going to a single point (i.e. a bank or PayPal)
- No verification for new users — anyone can use it
The Disadvantages of Bitcoin
- Mining uses lots of electricity
- Not as fast as other cryptocurrencies
- Fees change a lot
- Anonymous — used for crime
- Difficult to use — private keys, public keys, etc.