First of all, what is the basic idea behind the bitcoin? Simply put, it is a form of electronic cash. In layman’s terms, the currency that is derived from this technology is known as bitcoins. It is essentially a digital asset and a payment system based on cryptography. There are several benefits associated with using the bitcoin.
The first advantage that you can avail is security. Unlike conventional money transfers done through banks and financial institutions, you do not have to go through any kind of hassles. With the help of bitcoins, you can transfer money to anyone anywhere in the world. The only thing that is required is that you download the bitcoin wallet, from which you can transfer your bitcoins directly to any address of your choice.
In fact, you can convert your normal banknotes and coins into this digital currency. This is possible since the bitcoin is basically a form of digital currency and not a physical form. There is no need for a third party or a government official to sanction the transfer of these coins and notes to other parties. The only thing that is required is that you have downloaded the bitcoin wallet, from where you can perform your own private transactions and money transfers. The only thing that you have to bear in mind is that, since the transaction is done on the internet, it is technically possible for someone to steal your personal information like your pin number or your password.
Since the main motivation behind the creation of the bitcoin is to combat against the evils of the conventional banking system, most people are wondering what would happen to traditional currencies like the US dollar, the UK pound and the Euro when the bitcoin network comes into existence. To know about this, it is important to understand that the current status of the different currencies cannot be ruled out completely. For instance, the value of the Euro could go down significantly if there is an economical or political crisis in the European Union. It is possible that it could even go up significantly because of a strong euro economy. However, there is no obvious indicator for the fall or the rise of the Euro, so we cannot say that this particular situation is inevitable.
The main thing that most people are worrying about is the possibility of their private information being hacked by those people who are in business to exchange these coins for profit. This is why the bitcoin protocol was developed to make it impossible for anyone to manipulate the trading process. Basically, this particular feature is known as “blockchain”. With the help of this tool, every transaction that is done is logged in the public ledger called the “blockchain”. Every transaction is visible to all users at the same time.
Unlike the conventional currencies, the bitcoins are not a product that can easily be reproduced. Even if a person has the knowledge to reproduce the coins, he can’t do so because the production of the bitcoins involves an intensive level of mathematical calculations. However, this feature does not affect the usability of the bitcoins. Basically, this makes it less risky way to invest in the currency because no investment can make you gain profits in a shorter period of time than the bitcoins can.