It is expected that technology will progress faster than it was expected. And alongside that progress is the wide usage and acknowledgment of digital currency. But what are these digital currencies? What is Bitcoin, and why is it making a wave in the digital trend?
Understanding Bitcoin and other cryptocurrencies can break you into a cold sweat. Trust us, it happens. It’s too technical and too complicated for non-techy individuals, especially if you start mentioning “decentralization,” “Blockchain,” ‘cold wallets,” and “whale.” Those words might be simple if you take it to a layman’s term but not in the world of digital currency. They are more than that and stand for an entirely different thing.
This is why we’ll explain what Bitcoin is and all the other “complicated” things and terms around it. It’s imperative to emphasize that understanding the basics can help whenever you need to start accessing or using one in the future.
What is Bitcoin?
Bitcoin is a digital currency, as others would like to call it a “cryptocurrency.” So, basically, it is digital money. However, if you are thinking of your money in your online bank account, that’s entirely different from digital money.
Here’s what’s more interesting with Bitcoin.
We know that Bitcoin is a digital currency, right? But unlike your money in the bank, bitcoin goes through decentralization. The decentralization process typically means a central authority does not issue it. In other words, there’s no specific individual or organization that has any authority over it compared to central banking systems.
Bitcoin works with this so-called “distributed ledger technology” that serves as the public transaction database. The perfect coined term is “blockchain.”
Given that Bitcoin is a decentralized process, everyone has access to it. It means no individual can single-handedly change the transaction at their own will and cheat the system. And since Bitcoin follows a blockchain, it is resistant to any modification. Any attempt on the blockchain alteration will subsequently affect the entire network and will cause great collusion in the majority.
The biggest advantage of Bitcoin processing in “open source” software is that it does not allow any individual to attempt to send or spend coins they don’t have, making copies or undoing any specific transactions. All of the transactions are recorded publicly. And thanks to the effort of many Bitcoin miners, “double-spending” is a far-fetched idea.
The next intriguing questions would be, “Who are these Bitcoin miners, and what mining they specifically do?”
Well, to be exact on that, Bitcoin mining is digging through the blockchain and acting as auditors. Hence, Bitcoin miners. They are paid in doing the auditing of every transaction, and the greatest reward is a bitcoin.
The main role of Bitcoin miners is to check and verify the legitimacy of each Bitcoin transaction. And the growing numbers of Bitcoin miners are not surprising since they look forward to the rewarding prize they’ll get once the work is done.
If you’re interested in how much a Bitcoin miner earns, well, the sum up value for the latest conversion and reward prize is $111,000. During the first year, miners are rewarded with 50 BTC (2009). Years later, it was down by half, and by 2016, it went down to a half as well. And the recent update, May 2020, the reward went as low as 6.25 BTC for every completed block.
And during November 2020, the exchange value for every BTC is $17,900. So, do the math, and there you have it, a pretty good enough commission for doing some auditing work.
The current conversion value of 1 BTC to US dollars is now at $35,000 in estimation. If you want to be a Bitcoin miner, you better start mining.
Benefits Of Using Bitcoin and Other Cryptocurrency
There are other cryptocurrencies out there as well. Aside from Bitcoin, Ethereum (ETH) is a popular cryptocurrency just behind it. These two giants in the digital currency world are the most popular. When it comes to Market Capitalization, Bitcoin is leading at $421.7 billion, while Ethereum is at $73.2 billion. So what does this mean? What can it benefit you?
There are tons of things having or buying a Bitcoin can do to you, such as:
Paying Anonymously
Anonymity in cyberspace is becoming a popular thing since the stringent promotion of cybersecurity. Maybe not everyone is sensitive to their personal information. Still, other users want to make sure that their real personal data is secured every time they access the Internet. And this is where Bitcoin can do its part.
Remember VPN? The service that can hide your real IP address while accessing the local network or WI-FI connection? Well, you can pay for that service without putting your card details at risk. You can use your Bitcoin and gift cards as a form of payment.
Given your interest in purchasing a VPN, make sure to conduct the purchase at your own network and don’t attempt to do it in a shared or a local WI-FI connection. Any transaction done in a shared network will endanger your data security since you’re not protected with a VPN.
Furthermore, it’s best to remember that paying with a Bitcoin limits you to some benefits. The most common limitation is you cannot perform recurring payments. This is not possible due to security purposes. Also, paying with a Bitcoin needs to be done manually.
Make sure to subscribe to the longest term available in your VPN service. You can also enjoy a lesser purchase price and other advantages they offer in buying their service upfront.
Quick Tip: Though there are VPN services that use a non-logging system, it wouldn’t hurt to add an extra layer of security. And if you firmly believe that cybersecurity is a priority, then paying from an anonymous source is a great idea.
The second major benefit of having or buying a bitcoin is that it eliminates any banking fees.
Yes, you heard it right. No more banking fees. That means no maintaining balance, no withdrawal fees, no overdraft charges. Basically, the rules of any banking system, such as “the maker and taker fees,” are all eliminated when you use Bitcoin.
So if you’re thinking of buying any items or goods online, you can check if they accept Bitcoin as a payment method. If so, then you can save yourself some money compared to the usual digital banking payments.
Third, international and wired transfers can be done with no extra fees.
We all know that international transfers are expensive, charging your bank a hefty amount on top of your transferred money. And that for many users is quite a trouble. However, it is eliminated with Bitcoin payments.
As mentioned before, bitcoin transactions don’t need a middleman, such as intermediary institutions or the government, to make sure that the transfer is made successfully.
With Bitcoin payment, you can transfer anytime and anywhere you are on the globe. You only need to wait for the blockchain confirmation that your transaction is recorded. The long waiting periods for the specific authorization are eliminated. Thus, your receiver can have the money in an instant.
Bitcoins cannot be stolen.
If you’re thinking if there’s any possibility that your bitcoins can be stolen, it won’t be stolen, and it cannot be stolen from you, not unless someone snooped on your phone and does the stealing physically (that’s entirely a different thing). But digitally, bitcoins cannot be stolen.
Also, no one can check how many bitcoins you have. Even if you made your address public, no one could check how many bitcoins you have. Bitcoin address generation can be done easily, which is the reason that it greatly increases your privacy. Unlike the traditional currency systems, chances are there are third parties that can access your personal financial data if they go through the hoops of hacking your account.
Another major benefit of the uprising of Bitcoin and other digital currency is that it leads the industry to create more work professions such as Bitcoin miners, Blockchain builders, and other crypto-related jobs.
The Future Of Bitcoin and Cryptocurrency
The future of Bitcoin is on the rise. It’s positive, and the industry is looking forward to it. Even though some economists and businessmen look at bitcoin as fragile and unstable, the future of Bitcoin is bright.
It might not be as bright as the traditional and well-managed businesses, but it does have potential. It does come with some drawbacks, such as price volatility that many legendary investors thought about it.
However, many believed that Bitcoin would work out, and because of this, virtual wallet technology is increasing. It is getting an advancement, and the wallet technologies that are being built now are more refined and secured. This allows more users to manage their bitcoin through storage, payment, and receiving digital money anywhere.
Takeaway
Technology and invention are both amazing, which is why there’s no surprise that the majority widely accepts Bitcoin. The flexibility and the adaptability of this digital currency eliminate the common problems an individual faces.
This includes the major fees issues during money transfer and payment transactions. Besides, Bitcoin is developing, and through its development, it allows other opportunities to be created. It might not be as stable as now, and there are definitely drawbacks, but Bitcoin has great potential. It’s no wonder that many people are using it and gaining an advantage from it.
Author’s Bio
Whether he’s researching the latest mobile hardware specifics or diving deep into the world of software development technologies, Zachary loves to stay in the know. His talent at simplifying and explaining complex technological concepts makes his blog posts easy to read but very informative. Few people are as enthusiastic about mobile technology as he is, and he’s always ready to analyze a new trend.