Bitcoin is an alternative currency which can seem daunting to the uninitiated but in the community passionate and driven by this new kind of money there is a lot of enthusiasm and excitement for the future.
Bitcoin could change the way we think about money and it could make paying for goods and every kind of transaction very different. Here we’re taking a look at all you need to know about Bitcoin and how it could eventually become part of everyday life around the globe.
What is Bitcoin? Where did it come from?
Bitcoin is a digital currency which was created by a software developer called Satoshi Nakamoto.
It is both created and held electronically and unlike traditional currencies it isn’t printed, it is produced, mainly by businesses on computers around the world, using software programmes that solve mathematical proofs.
As well as being known as an alternative currency, Bitcoin is also known as a cryptocurrency, the first of its kind.
In simple terms, Bitcoin is described as very similar to email, ‘If you can understand the utility of being able to correspond with anyone on Earth with email instantly, essentially at zero cost, then think of Bitcoin as a computer protocol for doing that too but to transfer value’. Cary is the co-founder of Blockchain, a leading Bitcoin tech firm in London.
Unlike traditional currencies, which are printed, Bitcoins are ‘mined’ using the computer power in the distributed Bitcoin network.
Unlike traditional currencies again, Bitcoin isn’t based on silver or gold, it is based on mathematic principles and theories.
A mathematical formula is followed by Bitcoin developers around the world and the software used to follow the formula is open-source meaning as well as being the world’s first cryptocurrency Bitcoin is also the first open-source currency.
Perceived Benefits of Bitcoin
Many of the champions of Bitcoin will tell you exactly why it’s ‘better’ than traditional currency and it does have many benefits which include:
Unlike a traditional bank which requires you to tick many boxes before you can setup an account, setting up a Bitcoin address takes minutes and requires no fees to be paid.
This is a key differentiator between traditional banking/currency and Bitcoin.
There is no central authority controlling Bitcoin and therefore it is theoretically impossible for a single authority to cause a meltdown in the system or, as many banks have been seen to do in the past, simply take the currency away from its rightful owners.
If parts of the Bitcoin network are offline, other parts pick up the slack.
Bitcoin scores every detail of every transaction every made.
This huge ledger of transactions is held in what’s called the blockchain (not the company of the same name mentioned earlier) and this means you can check regularly the amount of Bitcoins you have available at any given Bitcoin address, and so can anybody else.
The system is anonymous as no one needs know your Bitcoin address or addresses unless you tell them.
Bitcoin for the Modern World
These benefits sound extremely useful but how does it work in practice? Is Bitcoin ready for the modern world, many experts believe it is and they solve a wide range of everyday problems including:
The worries that surround paying online – there is no need to share any personal, financial and sensitive data when paying with Bitcoins.
The need for specific technology to make a payment – anyone with an internet connection can carry out seamless Bitcoin transactions, in both tiny and huge volumes – a huge innovation for areas where banking isn’t the norm such as the developing world or for people who choose not to hold a traditional bank account.
Transaction and international remittance fees are minimal – whereas your bank may charge large fees for international payments or even domestic payments of certain types Bitcoin charges are miniscule, if not absent entirely.
With this in mind there is nothing to suggest that Bitcoin won’t become a leading payment network, becoming more popular than others and even rivalling traditional currency.
Nicolas Cary of Blockchain also asserts ‘”It’s not about whether Bitcoin is a revolutionary currency or not. But it’s hot. And it’s definitely good for the internet, it’s super-more-efficient than the way banks go about things now.
With digital currency they can serve new customers. They can serve customers they’ve never been able to serve before.
So those are the opportunities. Will they be able to move quickly enough? Time will tell’.
The next few years will be crucial for Bitcoin industries and the more wide known their work becomes, the more people will be tempted to get involved.