Bitcoin first emerged in 2008, following accusations that major banks were misusing borrowers’ money, fixing the system and charging huge fees for the privilege. The pioneer of Bitcoin – a mysterious individual or group of individuals known only as Satoshi Nakamoto – wanted to put the seller in the driving seat, removing the middlemen and making all transactions transparent, as well as free from interest fees and government intervention.
What is Bitcoin?
Bitcoin is a virtual currency. Transactions in Bitcoin can be made by referring the purchaser to your signature – a line of encrypted code. The code is decoded via the purchaser’s smartphone in order to obtain the cryptocurrency. Transactions are securely run through a peer-to-peer computer network.
Drawbacks of Bitcoin transactional properties
Once a transaction has been confirmed, it cannot be reversed. This can be problematic as it means that there is no recompense if you inadvertently send your money to a scammer, or if your computer is hacked.
Bitcoin transactions are anonymous in that no accounts or transactions are connected to real-world entities. Although you can analyse the flow of transactions, you can’t connect them to a person’s name or address.
On the plus side, Bitcoin transactions are virtually instantaneous – no having to wait for payments to clear. Transactions occur across a global network of computers, so they are totally independent of your physical location.
Bitcoin funds are securely locked away in a public key cryptography system. Only the owner of the key number can send funds, making it impossible to hack or break the system. Your Bitcoin is more secure than any bank account or safe.
Bitcoin is permissionless. As it is just software that can be downloaded for free, you don’t need anyone’s permission to use it. Once the software has been downloaded and installed, you can send and receive Bitcoin and other cryptocurrencies.
Bitcoin is a virtual currency that can be used by anyone to send and receive funds across a secure global computer network. There are no bank fees, no interest charges and precious little regulation, making Bitcoin and other cryptocurrencies the future of finance.