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What is
Bitcoin? Pros Cons and Features
Physical valuables such as gold and silver
were previously exchanged for commodities and services. However, since these
were cumbersome to carry and prone to theft and loss, banks offered to retain
them for us, producing notes that confirmed our bank balance.
The
relationship between these notes and the goods they represented was eventually
severed. Governments, on the other hand, claimed that the notes themselves were
valuable.
We
rely on banks to maintain the value of our currency, so we can take cash as
payment and expect others to do the same.
A
cryptocurrency is a digital form of money that operates outside the established
framework of national governments, central banks, and private institutions. It
allows two individuals to trade it or purchase and sell it without requiring a
third-party payment processor like Barclays or PayPal.
To
put it another way, each participant in the transaction believes the item being
traded has intrinsic worth.
Sending a bitcoin payment is like sending an
email, quick and straightforward. Using an app or website and the person’s
unique Bitcoin address, you move Bitcoins from your digital wallet (obtained
when you purchase the money from a crypto exchange) to someone else’s.
Payments
are handled and confirmed by a network of everyday individuals using computers
that run specialised software. Bitcoin miners are the people that help out.
They overcome increasingly complicated mathematical verification problems
created
by
Bitcoin’s source code – its computational DNA – using high-end computer gear.
The
hardware is costly, very powerful, and consumes a significant amount of energy.
The
miner uploads a record of the transaction to a shared public ledger whenever a
payment is validated. The sender and receivers Bitcoin addresses and the amount
sent is included in the record.
The
ledger entries cannot be changed or erased. And, since everyone’s copy of the
ledger must match, it’s exceedingly difficult for someone to say they possess
more Bitcoin than they do.
Miners
do not check transactions one by one. Instead, transactions are organised into
‘blocks,’ each having a certain amount of storage space. A new, empty block is
formed when a block is ‘full.’
Each
new block has a connection to the preceding block, which contains information
about past transactions. Thus, the blocks create a chain that stretches back to
the initial Bitcoin transaction.
This public ‘blockchain’ ledger keeps an
indelible, definitive, and transparent record of which wallets contain Bitcoin
and how much each wallet has at any one moment, complete with receipts.
Pros of using bitcoin
There
is no one to take a share of each transaction since there is no middleman.
Bitcoin is worldwide money that is also simpler to transfer across borders, and
since it is mainly anonymous, it allows private transactions.
Cons of using bitcoin
It’s
unregulated, volatile, and doesn’t have the same widespread acceptance as
conventional currencies.
The
amount of energy used throughout the world to make Bitcoin operate is likewise
enormous. According to Oxford University experts, it has the same carbon
footprint as Argentina as a whole.
This
has generated concerns about the phenomenon’s long-term viability, particularly
as global economies attempt to cut greenhouse gas emissions per international
environmental accords and related “green” objectives.
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