Conceived as an alternative to the currencies created by central banks and traditional markets, cryptocurrencies are now making inroads as alternative banking networks even if several financial institutions are worried. But what really is Bitcoin?
Bitcoin is electronic money (no notes or coins are issued). It is based on a decentralized computer network that provides an innovative means of payment to its users. It can be freely used by anyone, offering unique features for businesses and individuals. That is, it does not depend on a body such as a central bank – as is the case with fiat money such as the euro or the dollar and the rest of the currencies circulating around the world.
The Bitcoin is based on a computer network where each workstation plays the role of both server and client. This is called a peer-to-peer (or P2P) system. The number of users is not known globally, but the cryptocurrency community estimates that nearly five million people will use it by 2019.
For several years now, many in the community of Bitcoin users have been intrigued by the very nature of this currency and its mode of operation. At its onset in 2009, it was relatively easy to mine Bitcoins – that is, to create them on network computers. However, it is now becoming more complicated to do so.
Indeed, Bitcoin’s protocol is designed in such a way that only a finite number of Bitcoins (21 million) can be created. Over time, it has become increasingly difficult and expensive to create Bitcoins. However, Bitcoin users count several advantages of the cryptocurrency:
#1.The Reliability of the currency
The technological system on which Bitcoin is based, known as the blockchain, makes it possible to perform encrypted and tamper-proof transactions, which makes it a very safe monetary system for users.
#2.An independent currency
Many users appreciate that Bitcoin depends only on its users on the network and not on a bank.
The other benefit that many users find is that it is also anonymous.
#4.A network that extends
In the beginning, Bitcoin was mostly used on websites but this virtual currency is now accepted by some merchants including computing giant Microsoft.
This strange new currency called Bitcoins is likely to revolutionize the world of finance just as the Web did with the media and entertainment industries.
In short, what is happening today with Bitcoin is only an aspect of what has become of money and the immense difficulty of regulating it in a world where modernity is shaking up the rules.