Imagine you were in secondary school all over again, seated in the classroom and the teacher asks you to tear a sheet of paper. No one likes impromptu tests, well except the know it all, no one likes them either. So just for a moment, let’s go back to the classroom where the question goes thus, “what is bitcoin?”
be rest assured you will ace this test and bonus point, with the help of the information below, you could become a bitcoin millionaire which can be traded into raw cash. You interested? Alright first things first, we have to answer your impromptu test question.
What is Bitcoin?
Bitcoin is an alternative type of payment system, a digital coin that holds value, some call it internet money, an alternative currency, a parallel financial system or simply put, “the future of digital currency”. The best part is simply the fact that no central body like a government, a central bank or a third-party is in charge of how you spend your money, therefore you can boldly say it provides a viable decentralized alternative to the current financial infrastructure and also enables spending with full transparency through a publicly available ledger known as the Blockchain.
The Bitcoin is really easy to operate and can be sent quickly and securely from anywhere on mother earth to another. A transaction involves both a public key (otherwise known as your bitcoin address), which is generally known to everyone and a private key known only to the bitcoin user. None of your coins can be spent without knowing the private key, well, if this happens, then know you have been hacked but not to worry, there are preventive measures to make sure a hack is almost impossible. You can call it one of the greatest advantages of using the Bitcoin.
If you are a slow learner like I am and still don’t understand what a bitcoin is, don’t give up just yet… click on the link below https://www.coindesk.com/bitcoin-explained-five-year-old/ or visit https://blockgeeks.com/guides/what-is-bitcoin/
Bitcoins are created through a process called Mining. Not the physical mining though, because unlike the actual mining we know, bitcoin mining is achieved with fast computers solving complex equations. Transactions couldn’t be possible or successful without the bitcoin miners. There would be no way to validate if truly your bitcoins were genuine, most importantly, there would be no new coins brought into circulation and we don’t want any of that do we?
Moving around with physical cash in hand could be so uncool and also attract the wrong kind of attention which is why we store money in our wallets or purses. Similar to physical cash, bitcoins are stored in a digital wallet. Each wallet owns its’ public digital address to which coins can be sent. The digital address consists of numbers and letters 30 characters long. It is free to create a new wallet, and also there is no limit on the number of wallets a person can have.
There’s so much uncertainty in the future of bitcoin but trusting the digital economy to function without the middleman is the next best thing. You are probably saying to yourself, ‘once bitten twice shy’. Maybe you got stuck in some Ponzi scheme and they treated you bad and took away all your money. Now, because nothing is perfect, experts have come to the realization that not even the one of a kind Bitcoin has all advantages; it also has its own disadvantages as well. Some of which will be discussed here:
Advantages of Bitcoin
- Bitcoin transactions cannot be identified, which means they are private. One can only know the address of bitcoin on which the payment has been sent and received.
- No holidays, strikes, boundaries, no third party, no payment limit. You can call paying through bitcoins the redefinition of financial freedom.
- There is a very low and sometimes no transaction fees depending on the priority of the person when it comes to paying through bitcoin.
- Transactions are clearly secure, not reversible, and most importantly do not hold any customers’ personal information.
- A bitcoin transaction can be extremely fast if compared to banks. You could say it is as fast as a text message sent and can be processed within 10 minutes depending on the network service of your country.
- This could be said to be the biggest advantage of the bitcoin as it does not require purchases made via credit cards or debit cards (which requires that you enter all your secret information). Instead, it is approved by combining your public and private keys together and applying a mathematical function to the transaction.
- There can never be a case of inflation when it comes to the bitcoin, so there’s really nothing to be worried about. Probably the major reason some countries call it the Future of Money.
Disadvantages of Bitcoin
- Due to its young age, many people are still unaware of Bitcoin, some won’t just accept it, others welcome it but the list is really small and needs to grow in order to benefit from network effects.
- Genuine investors think of investing in Bitcoins as too risky as the prices increase and decrease at a very high pace.
- Some of the known software is still in beta with many incomplete features in lively development. Some of the features are still not ready for everyone and therefore offer no liable insurance.
- If your bitcoin wallet goes missing, so do all your bitcoins. They are simply lost forever.
Investing in Bitcoin does not just pose the question should you invest, but as a matter of fact; how to invest. You shouldn’t just jump out of the aeroplane without a parachute, so begin by educating yourself. Learn more about Bitcoin, understand what it is, what affects it, and decide what you want to do with it.
Keep in mind that only you can answer the question of whether or not to invest in Bitcoin. You can speak with others who have already invested in it and also read online but do not follow someone else’s advice blindly.
All the Best!