The international money transfer industry has witnessed a revolution over a decade with the advent ofa concept called ‘Bitcoin’ that has taken the world by storm. What everybody has been talking about is ‘Bitcoin’ and the network that facilitates Bitcoin transactions called ‘Blockchain.’ Before we dig into the details of how Bitcoin has transformed the banking sector, let’s first understand what bitcoin is and how it works.
Introduction: What is Bitcoin?
Bitcoin is a cryptocurrency (or a digital currency)that can be used to buy and sell goods and services. It can be referred to as a virtual or online version of physical money. In other words, Bitcoin can be described as a computer file that is stored in a digital wallet app on a computer or smartphone device. Bitcoin whitepaper is a theoretical framework to lay the foundation of Bitcoin and give a whole new meaning to the value of virtual money.
A path-breaking Bitcoin whitepaper published in October 2008 defines the functionality of Bitcoin. Known as the Bitcoin creator, Satoshi Nakamoto published the Bitcoin whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Bitcoin SV stands for Satoshi’s Vision, which states that it is better to rely on verified transactions than on third-party mediators i.e. financial institutions.
Satoshi conceived the idea of Bitcoin-based on the following points:
- Elimination of the role of external financial intermediaries such as bank and credit card companies while making payments.
- Peer-to-peer payments to take place over an online network.
- Allowing two parties to make an online transaction with one another without the need for a trusted third party.
- Innovate an electronic payment system based on cryptographic proof rather than trust. Cryptography refers to the use of codes and protocols to secure virtual communication.
- Bitcoin is not regulated by banks or governments.
The traditional payment system has many limitations:
- One has to submit personal data for every transaction.
- Many merchants and consumers find it hard to trust banks due to safety reasons.
- Traditional payments are frequently hacked.
Difference between Bitcoin and Bitcoin Cash
Bitcoin Cash is another crypto coin that has its own value, wallet address, and usage. Bitcoin and Bitcoin Cash both have their respective software and hardware wallets, online marketplaces, and centralized and decentralized exchanges. While Bitcoin is supported by almost all the online and offline businesses that allow cryptocurrency payments, Bitcoin Cash is likely to be supported by a relatively less number of platforms.
How to make Bitcoin transactions?
Bitcoins are valuable virtual currencies as bitcoin enthusiasts are willing to exchange them for real products and services and even cash. There are several ways to process bitcoin transaction:
- Bitcoin can be created using a computer, which is called Bitcoin mining. It is a process that helps you to create new bitcoins by solving computational puzzles.
- You can buy bitcoins by using ‘real currency.’
- You can sell stuff and receive bitcoin payment in return.
Are bitcoin transactions safe?
Since every transaction you make is recorded in a public list called Blockchain, it is convenient to check and track the history of bitcoins. So, it is difficult to make fake coins or be able to spend the coins that you don’t own. But it is possible for you to delete your Bitcoins or lose your wallet.
The altcoin is a term used to label the crypto coins other than bitcoin. There are many cryptocurrencies in the market namely Ethereum, Tron, Monero, and Litecoin. Although cryptocurrency has gained popularity over the years, you still need to be well-educated with the basics in order to go ahead with cryptocurrency investment. You need to be wiser while investing because cryptocurrency’s at still at a nascent stage.