How to Explain Bitcoin to Someone| MENAFN.COM

Sunday, 03 July 2022 11:06 GMT

How to Explain Bitcoin to Someone


(MENAFN- CCP Marketing)

Bitcoin is a new payment form that is unfamiliar to most people. Here are the Bitcoin basics that you should know. 

Bitcoin has existed for over a decade, attracting millions of businesses, investors, and individual users worldwide. Many online merchants and physical stores now accept crypto payments, allowing their customers to shop and pay for goods and services with Bitcoin. Several investment companies, too, have adopted it as an asset, mainly using Bitcoin to diversify their portfolios and protect their wealth from inflation. 

However, Bitcoin is still in the early adoption phase, with many people unsure what it is and how it works. The following article discusses some of the basics of Bitcoin to help you understand it and how it operates. 

What is Bitcoin?

Bitcoin is a currency like the US dollar, but it exists digitally. That means you can neither touch nor feel it. Bitcoin only works online via a smartphone, tablet, or computer with an internet connection. Unlike traditional currencies such as the USD regulated by governments and central banks, Bitcoin is decentralized. 

Decentralization is one of the characteristics that distinguish Bitcoin from other currencies. It enables users to transact anywhere in the world without external intervention. That feature also makes Bitcoin less susceptible to political or institutional influences, ensuring unmatched autonomy to all its users. 

Bitcoin also has a fixed supply cap of 21 million tokens only, meaning not a single more will ever come into circulation after miners have generated that amount of Bitcoin. However, the mining occurs at a pre-determined rate, embedded into Bitcoin's code. That induces scarcity, allowing Bitcoin to maintain its purchasing power over a more extended period. 

Miners generate new Bitcoin for circulation through a process known as mining. It mainly involves solving complex mathematical puzzles for Bitcoin rewards. 

How Bitcoin Works 

As hinted above, Bitcoin transactions occur online, without intermediaries. Bitcoin is a peer-to-peer currency facilitating seamless direct payments between the two parties involved in a transaction. Bitcoin users don't have to go through money processors or banks to complete transactions, ensuring greater efficiency and convenience. 

Using Bitcoin to pay for goods or trade requires a Bitcoin wallet. Several companies now provide free Bitcoin wallets that you can easily download and install on your smartphone or computer. However, you can also purchase Bitcoin wallets from vendors online. Nevertheless, crypto exchange platforms such as Immediate Profit are the most reliable. 

You can select a hot or cold Bitcoin wallet. Hot wallets are connected to the internet, while cold wallets are offline-based. 

A Bitcoin wallet comes with a private key and a public key. A private key serves as the PIN or password you will use to access your wallet. Thus, it should be kept confidential at all times since anyone who gains access to it can transact through your wallet. The public key is the address you will share with the person you want to send funds to or receive from them. 

Bitcoin runs on blockchain technology without any central authority. The blockchain compiles all Bitcoin transactions on an irreversible shared digital ledger. It validates the transactions in blocks, with unique encryptions that make it impossible for users or third parties to compromise the catalog. The Bitcoin network comprises thousands of computers called nodes, randomly distributed worldwide. 

Each node holds an identical copy of the ledger, ensuring consistency in all transaction records. A bad actor will need to simultaneously hack into all the nodes to alter the register, a virtual impossibility. All users on the Bitcoin network can access the ledger at their convenience, contributing to Bitcoin's high-level transparency. 

Bitcoin may be a new invention but, it has proven beyond doubt its more tremendous potential to eliminate the inefficiencies of the traditional systems. It is easy to use and more secure, with robust economic opportunities. 


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