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BITCOIN IN 60 SECONDS

Date: 2017-07-10 00:43:35


What is Bitcoin? Why use it? Why is it better than cash? You will find Bitcoin very beneficial to have and use at the end of this article.

Bitcoin is a relatively new form of currency that is just beginning to hit the mainstream, but many people still don’t understand why they should make an effort to use it.

Bitcoin was one of the biggest leaps in technology since the inception of the Internet, hailing the new era of digital money, disrupting industries and financial institutions as well as introducing a new social paradigm where transparency and trust are the default value.

How does this work?

Bitcoin has no central monetary authority. Instead, it is underpinned by a peer-to-peer computer network made up of its users’ machines, akin to the networks that underpin BitTorrent, a file-sharing system, and Skype, audio, video and chat service. Bitcoins are mathematically generated as the computers in this network execute difficult number-crunching tasks; a procedure is known as Bitcoin “mining.” The mathematics of the Bitcoin system were set up so that it becomes progressively more difficult to “mine” Bitcoins over time, and the total number that can ever be mined is limited to around 21 million. There is, therefore, no way for a central bank to issue a flood of new Bitcoins and devalue those already in circulation.

The entire network is used to monitor and verify both the creation of new Bitcoins through mining, and the transfer of Bitcoins between users.

Transformation in Financial Industry

German philosopher Schopenhauer was right in saying that all truth passes through three stages – first, it is ridiculed, then it’s violently opposed until finally it’s accepted as being self-evident. Case in point for Bitcoin.

Back in 2010, when most of the world first heard of Bitcoin much-renowned finance and economy experts were skeptical about the digital currency’s complex mathematical algorithm, dubious origins, and unknown creator.

Fast forward six years, leading banks and financial institutions are pouring millions of dollars investment into research. In the attempt to harness the power of the blockchain, the protocol that enables Bitcoins and other cryptocurrencies, major players such as Santander and JP Morgan gave a tacit acknowledgment to the fact that Bitcoin is valuable.

BITCOIN COULD ELIMINATE CREDIT CARD FRAUD. About one in 50 credit card transactions are fraudulent and merchants eat that cost according to Bitpay co-founder Stephen Pair. Bitcoin offers a huge opportunity to merchants because sensitive information is not transferred in Bitcoin transactions. This makes the potential for fraud minimal. Bitpay is a Bitcoin payments processor. (Bloomberg)

If banks proceed to adopt blockchain-based transactions as well as officially accept bitcoin as a currency, they will be doing humanity a huge favor. Considering current bank transaction times of up to five days not to mention the enormous fees as compared with any cryptocurrency transactional, blockchain payments would be instant and cheaper.

Inflation -vs- Bitcoin

One may argue that Bitcoin as a store of value may even be better than some of the national currencies, especially in countries where the local economy is turbulent as is the case with certain Latin American countries where $1 today may be worth just 50 cents the next day.

Another advantage of Bitcoin is it’s built-in deflation mechanism achieved by a hard coded limit of 21 million bitcoins that will ever be in existence. The way our traditional debt-based economic systems work, inflation is almost inherent in the design. In other words, your dollar’s purchasing power today is almost guaranteed to be lower in a year or a decade from now.

Matthew O’Brien, a renowned American author, and journalist for The Atlantic described Bitcoin as a “tech stock,” claiming that its volatility rate doesn’t represent a legitimate currency. O’Brien wrote: “Bitcoin has a massive deflationary bias. Its money supply is mostly fixed, but the menu of things it can buy is growing.