What is Bitcoin? Bitcoin - Currency
Bitcoin
is used as an electronic payment system. Nakamoto's idea of bitcoin was to create a currency that could be independent of all central systems with the ability to share data in such a way that no intermediary was required to authenticate and process transactions. Since this process occurs independently of the banks, Bitcoin has the ability to transfer without any transaction fees.
- There is no single person in control of the bitcoin network, and it is not printed in a physical form such as dollars, euros, or pounds sterling. Instead, it is issued (or "extracted") by people and companies. This is done by very sophisticated computers that use programs to decipher complex mathematical algorithms
- This means that bitcoin is not issued by a central bank or financial institution, unlike fiat money. Rather, all bitcoins are mined digitally through an online community. Anyone can join the network and mine Bitcoin on their own using massive computer power or simply buy Bitcoin from an individual or broker at the current transfer price. And unlike central banks around the world that print more money (which reduces the value of their currency), there are a limited number of bitcoins.
Only 21 million bitcoins may be mined, according to the Bitcoin protocol. Each bitcoin can also be broken down into smaller pieces, similar to how the pound sterling can be divided into pennies. A hundred million bitcoins could be divided into the smallest valuable fraction of a bitcoin.
Why do traders prefer bitcoin over fiat currencies?
It's an anonymous currency
- anyone can hold multiple Bitcoin addresses, and no personal information is required, such as real names, addresses, or payment details. Instead, the details are kept on the blockchain, which contains every transaction made on the Bitcoin network. This shows how much Bitcoin is stored in Bitcoin addresses and who owns them cannot be revealed.
There is no central exchange
- - every computer that mines bitcoins and processes transactions become part of the bitcoin network, where all the machines work interconnectedly with each other. And unlike fiat currency, there is no central authority that can change the rate or influence monetary policy like the Bank of England, which can influence the value of the pound sterling through policies or interest rate decisions. This also means that in the event of a failure in the Bitcoin network, the funds and Bitcoin will continue to flow between the devices.
Low cost and fast execution
- - money can be sent anywhere in the world and delivered in real-time. All you have to do is wait for the Bitcoin network to process the payment. In traditional currencies, you have to pay a large fee with your bank to get international money transfer services, but this does not apply to Bitcoin.
You may only have to pay a transaction fee if you're using a broker, and it's usually much less expensive than bank transaction fees.