Concept of Bitcoin

Broadly the concept of Bitcoin was to have a financial transaction system wherein the transacting people may not be dependent on any bank or financial system. If there is no bank or financial institution in between then there won't be any high transaction fees and data pertaining to the transaction will not be sold out. A person by the name Satoshi Nakamoto invented such a software in 2008 placed it on open source in 2009.

What is Bitoin: The first digital currency ever known to the world is BITCOIN. It could be the future of e-commerce as it is paving a way for virtual money. Just like the conventional currencies- dollars, yen and Euros, it can be traded, exchanged and holds a value in the market. Without any intermediary like bank or paypal, Bitcoins can be transferred online at a faster rate, with no requirement of personal details that are otherwise required. It works through a decentralized, peer-to-peer network for convenient, prompt, secured and transparent operations.

How does Bitcoin work?: Due to the absence of central issuing body, production and transfer of crypto-currency is handled by the process called mining. It involves complex mathematical calculations on specific software programs to produce Bitcoins. The mathematical formula is available freely to be used by anyone around the world. However, for performing cryptological functions, advanced computer systems are required that can perform billions of calculations precisely. Additionally, software is an open source making Bitcoin network completely transparent.

What are the strengths of Bitcoin?: Decentralized structure is a pure core innovation in Bitcoin. It has neither central control nor central repository for information, thus it works flawlessly without failures at central end. Without permission from third party, it facilitates the user to directly trade coins or store them in local wallet. Further, it is a deflation currency since only 21 million Bitcoins can only be created ever. Though Bitcoin allows transparency yet can be as much private as you want. Basically, it has a transparent anonymity nature due to which one can know how much a specific Bitcoin address holds in transactions but no one knows who holds a particular Bitcoin address. In short, user remains completely anonymous while using this currency until he submits his both personal details and Bitcoin wallet address. The anatomy of Bitcoin is such that you would be charged minimal during transactions or sometimes noting at all. Some people correlate the popularity of Bitcoin with the internet. It has been said that as Internet future was unpredictable in the late 90’s and there were low chances of its acceptance, Bitcoin ascendance is going through the same phase.

What are the Weaknesse of Bitcoin?: Like everything, Bitcoins have a flip side too. They are non recoverable which means once sent, they are gone forever unless the recipient returns them to you. Else, if you lose your private key or wallet seed or the hard drive with wallet gets corrupted, you can’t have your Bitcoins back. Let’s take an example of a British man who has thrown his hard drive containing around 7500 Bitcoins in 2009. By the end of year 2013, the value of Bitcoin was $1200 which means a hard drive worth 8.25 million dollars was lying somewhere in the dump. There are few hurdles that put the future of Bitcoin in the dark including legal uncertainty (government might ban its use), low social acceptance and unstable exchange rates.

Happy Steeming .!!