Bitcoin is a new form of electronic currency that is very similar to traditional currency in function and use except that it is not in a physical form but exists in a digital format.
Satoshi Nakamoto, an alias, created the Bitcoin in 2009. Using software and a paper to describe how it worked. The idea behind creating this form of currency was to create a means of transacting/exchange that did not require a third party or central body in a secure and verifiable way.
Bitcoin can be used as a means of exchange for goods and services. It can also be used to trade for other cryptocurrencies. But Bitcoin has some unique and very attractive qualities:
- It is Decentralised: Unlike the banks, no single institution controls the Bitcoin network. It is maintained by a group of volunteer coders and run by an open network of dedicated computers spread around the world.
- It is Global: Bitcoins can be sent across the world. There are no limits on the amount that can be sent and no laws restricting it.
- Bitcoin Transaction Fees are Cheap: The fees charged for trading Bitcoin is almost negligible. From as low as half-cent to about 5 cents for any Bitcoin transaction. This makes it attractive to individuals who are burdened by credit card and bank charges when making transactions.
- Supply is Limited: Unlike traditional, fiat currency (such as USD, EURO, etc) have an unlimited supply. Central banks can print as much as they want and flood the system, trying to manipulate the currency's value in relation to others. Bitcoin, on the other hand, is tightly regulated by the underlying algorithm controlling it. Just a few new coins are produced every hour and based on the algorithm, this value will continue to reduce until a limit of 21 million coins has been produced. This ultimately increases the value of the coin.
- Personal Information is kept Private: In carrying out transactions with Bitcoin, there is no paperwork to be done or validation process carried out just like in the traditional banking system. All that is needed in Bitcoin transactions are the Bitcoin addresses which the system verifies and uses to approve the transaction.
- It Cannot Be Reversed: Unlike online transactions, credit cards, and digital payment systems that can be reversed by the sender, Bitcoin transactions cannot be reversed by the sender.
- It is Secure: The Bitcoin network runs on cryptography and hence makes it more secure than the more regular credit card/online transactions. No sensitive information is released during a transaction, there is a very low risk of your financial information being released over the internet or having your identity stolen.
You can learn more about Bitcoin on Busha's learning hub: learn.busha.co