Bitcoin is a Ponzi scheme launched to fool the investors to dwindle millions. How can the money be used virtually or in a paperless form, and how can this use be advocated to be legal tender money like the fiat currency? These are some of the common things we have heard about Bitcoin from people. Interestingly, the people saying all these are wrong; they are just ignorant about the concept of cryptocurrencies and their working in the system. Bitcoin is a virtual currency that runs on a decentralized distributed ledger system – blockchain – without a central authority interference. The Bitcoin blockchain connects investors or nodes through a channel that records all the transactions in blocks linked through cryptography. Each block has a cryptographic hash and is duly timestamped so that no transaction is missed, deleted, or altered by an intruder.
The major loophole considered by investors in Bitcoin is the lack of a legal governing central body, unlike fiat currencies backed by government funds. However, in reality, reports claim that the U.S Dollar is not backed by any strong base as advocated by the authorities. The complexities, limitations, and arbitrary control of the governments over fiat currencies were the driving force behind the launch of cryptocurrencies. Bitcoin has a limited supply of 21 million, and after this mining, the blockchain will not produce any currency. This eliminates the risk of inflation and helps to check on the demand and supply of the currency in the market space.
How Is Bitcoin Secure Than Money or Cash?
- Bitcoin is digital money – Bitcoin uses blockchain ledger technology for storing and operation of transactions. It does not involve any intermediary or a central regulator for transaction processing and verification. This keeps the power decentralized and reduces the transaction fees significantly.
- Less volatility – Trading in Bitcoin is a smooth process as it is free from geographical restrictions. It is less volatile than fiat currencies and helps investors to transact securely online.
- Investment tool – Bitcoin can be used for investment purposes seamlessly without undergoing the complex conversion system. It is considered to have the best features of cash and gold assets, which is considered a profitable choice for open market functions. Even many platforms are offering to maximize you profit from Bitcoin trading and that can make you a millionaire. Click here to know more about it.
- Less regulatory control – One of the most obvious reasons for Bitcoin’s popularity is the lack of legal, regulatory control on the currency. Trading is free from time-consuming restrictions and tax implications as well.
- High-end security – Bitcoin runs on its native blockchain channel, which offers the best-in-class security, transparency, and immutability. The transactions entered on the blockchain cannot be changed or modified unanimously without the knowledge of all the participating nodes on the system.
How Does Bitcoin Work?
In simple words, Bitcoin works as gold. Like we need to mine gold fields to extract gold, miners need to solve complex algorithms to expand the Bitcoin network. The miners solve the ‘maths’ and add new Bitcoins to the system to get Bitcoins as rewards in return. For the investors willing to trade in Bitcoin can do so by following the given steps:
- Install a Bitcoin-supporting wallet on your desktop or mobile phone. You will get your first Bitcoin address through this; however, you can create more addresses on different wallets.
- The transactions made by the owner get chronologically recorded in the blockchain so that you can keep track of all the processes.
- Bitcoin wallet does not store the assets but keeps the private key or the seed phrase, which helps execute the transactions on the system. The digital signature restrains the modification of transactions by intruders.
- Each transaction is included in the blockchain via mining, and it takes nearly 10-20 minutes for the confirmation process to get executed.
- The investors can use Bitcoin to purchase day-to-day items or can store it for trading on exchanges.
Conclusion
Bitcoin has faced its own share of ups and downs to establish itself as a strong player in the financial space. The currency received a mixed reaction from the industry as some supported the novel concept, while others kept a skeptical take on it. However, Bitcoin has managed to sustain itself in the market as the pioneer of cryptocurrencies and is likely to strengthen its control soon.
