How Is It Different From Traditional Currencies?
- It is created by the means of a peculiar process, which is known as “Bitcoin mining”. The Miners across the globe use specific mining software on computers to figure out the complicated algorithms of Bitcoin as well as to approve the transaction. These Miners are paid a transaction fee, while fresh Bitcoins are generated by sorting out the algorithms.
- It doesn’t have any kind of clearing house or centralized authority, such as central bank, Visa or MasterCard network. The payment network functions on a peer-to-peer basis, which is completely managed by the miners and users across the globe. Since this is done anonymously over the internet directly between two people, without the involvement of a clearing house; it doesn’t attract higher charges.
- As on 20th December, 2013; only 12.1 million Bitcoins were in circulation, which makes it a very limited amount of currency over the digital interface. The more Bitcoins means harder algorithms to be solved, so it has been capped at an amount of maximum 21 million. However, this limit will not reach till 2140, which is still a bit far. Hence, this digital currency becomes more valuable with people using it more often.
- These can be stored in Bitcoin wallets, where public addresses and private keys are required to do the anonymous transfer between the users. It can be easily procured from its exchange portals.
- Blockchain is a type of public ledger, which records all the transaction of Bitcoin and it shows off the owner’s individual holdings. The privilege to access this ledger in order to verify the transactions lies with every user. This transparency stops any possibility of double spending and fraud with the same currency.
- The only flaw of this currency is that it is not at all insured by any of the government or private agencies, so if its secret keys are lost or stolen or in the event of Bitcoin exchange closure, they can’t be retrieved. However, in such a scenario, the associated Bitcoins will be out of the circulation and lost forever.
Response Of The General Populace
The advantage of using it is that the user remains absolutely anonymous, when he does a purchase, while the entire transaction fees is very low than what one pays for using a credit card. The transparency and the capping of the volume of this currency; makes it absolutely the most favorite of the users. Though some critics say that this is very volatile and it may not be stable, which is partially true and would be so for some time now. However, in the longer duration of time, the things will stabilize and the price of Bitcoin Ego will be benefiting its buyers. There is no gain without risk in initial public offerings that new firms launch; same applies here.