Bitcoin is a new form of money that people have been talking about since 2009, when Satoshi Nakamoto published a paper on the internet describing it. The idea was to produce a peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution. There’s no central issuer or controller, so unlike credit cards or PayPal you don’t have an entity which can lock down your account and prevent you from spending your money. It is designed for secure transactions which can be easily confirmed by anyone, for any amount, in real time with minimal fees. A Bitcoin Code has several important features.
1 – It’s Secure
Using cryptography – the same technology that secures military and government websites – we can create a system where both parties to an online transaction can prove their identity and trust. This allows you to digitally sign a message with your private key, which proves your right to spend money from your public key (which is like an account number), and then broadcast that signature out into the network for everyone to verify. It’s based on another cryptographic concept called ‘proof of work’.
2 – It’s Decentralized
There is no central authority, so no one is in charge who can inflate the currency by creating more bitcoins. The rules are written into the software itself, so its functions are fixed, known upfront and cannot be changed without community consensus. Anyone can run the software and verify transactions for themselves.
3 – It’s Open Source
The bitcoin protocol has been published as an open source project, so anyone can review it, use it or contribute to it if they want to. This means that the software is public domain which no one owns (not even bitcoin core developers) and therefore people can trust that it will do what its supposed to do without hidden agendas.
4 – It’s Censorship Resistant
Bitcoin was created in response to people using financial institutions like banks getting in trouble with the law because their funds were considered suspicious by authorities. Transactions done with bitcoin are censorship resistant because you don’t need anyone’s permission to make them; they’re only subject to rules within the bitcoin network that prevent certain things like double spending.
5 – It’s Fast and Scalable
Transactions are broadcast to the network within seconds, they can be confirmed as valid and irreversible within an hour, and once finished you can’t ‘reverse’ them without agreement from both parties. Only the transaction fee is beyond your control. This means it’s good for point of sale or online transactions where you want to be able to accept payment in bitcoins very quickly, but still have time to cancel if necessary.
6 – It’s Transparent And Flexible
The bitcoin software adapts itself according to how people use it – so although its initial form was designed only for buying/selling/transacting money, time people have built additional capabilities on top of it like coloured coins, payment plans, smart contracts and other things.
7 – It’s Anonymity
Bitcoin is not anonymous but pseudonymous by default. You don’t have to reveal your real name, address or any ID in order to receive a bitcoin transaction. However if you do want people to know who’s sending/receiving the money you’ll need to use exchanges that require KYC (know your customer). The same goes for trying to withdraw bitcoins from an exchange into dollars or euros; so far most exchanges ask for KYC documents before letting users cash out their winnings which can be annoying if all you want is take value off the site and away from it forever. there are privacy functions built into the bitcoin protocol that could perhaps be used to address this in future, but it’s not without risk.
8 – It’s Not Controlled By Anyone
There are no restrictions on who can acquire or use bitcoins, or how they can be acquired. The process of producing (mining) them is open source and decentralized so no one company controls the market. Although there are several large companies offering hosting facilities for miners, anyone with enough hardware has a fair chance to find blocks and get bitcoins in return.
Bitcoin has come a long way since it was first mooted in 2008, and there are promising prospects for the future. It’s an incentive-based system that has shown itself capable of innovation on top of innovation (just look at all the other cryptocurrencies), it doesn’t require legal contracts to make transactions, and is beyond anyone’s control save for the network as a whole.