“Any sufficiently advanced technology is indistinguishable from Magic”
– Arthur C Clarke, Science Fiction writer.
The science of Bitcoin seems more like magic to some and hence, just like it, there is excitement as well as fear of adoption.
What is Bitcoin Technology?
If you were to explain bitcoin to someone absolutely new to the technology, then the best way would be to take the example of sharing messages or photographs to someone–but in that, you retain the digital original. Banks, for example, decide whom you share the money with, even if it is digitally. Bitcoin removes this third-party and sends a digital object directly to the person with whom you wish to share.
Benefits of Using Bitcoin:
The biggest USP of Bitcoin is that it is a Peer-to-peer technology–no centralized third party. There is no intermediary when a transaction takes place. The system cannot be reversed or stopped and is impossible to be hacked or shut down. Any person with the Bitcoin software or Wallet can share money with anyone in the world just with the click of a button. The programming code is open-source, and hence anyone who needs to use Bitcoin can download the code and create their own software to manage Bitcoin transactions.
How Bank Wire Differs from Bitcoin Transfer:
Traditionally Banks have been associated with being a trust institute. That is why currencies around the world are actually promissory notes, which puts the liability on the bank to pay you back. This will displace the need for banks as a trust institute. In normal digital currency transactions, Banks monitor and regulate when the transaction does take place and who would be the recipient. This power goes to the people-it is exactly the same how the internet is to the people. Anyone can engage economically with another and the public ledger or blockchain gets updated automatically under encryption.
How Does Bitcoin Function? The Concept of Mining
Bitcoin works on the logic of Distributed consensus. A 100 million Bitcoin is called a “sitoshi”. It can be programmed to be anything of Value–digitized and tokenized- like assets. The process of Mining helps to create new bitcoins. This is run through a very powerful computer and attempt to solve blocks. All transactions are pieces of this mathematical puzzle forming blocks. Once the computation from the supercomputers helps solve the transaction, it actually helps in verifying all the transactions that have been done up to that point. But the algorithm is so designed that once the reward of the quantity of Bitcoins is Halved every four years.
Currently, the average number of transactions per second is 4 to 7. The lightening protocol which is under development will make a million transactions inside the current 4 to 7 transactions. This will help in scaling up the technology.
Understanding Bitcoin as a technology can be difficult. Hence new investors should take the help of organizations like Bitcoin Profit (Visit bitcoins-profit.com), who are investing in Bitcoins themselves and are assisting users to transact safely with other peers.
Bitcoin is rising up to be a Crisis Currency. Developing countries who still do not have access to money can now do transactions directly, without relying on a third party. But On the contrary, Governments are now investing in Block-chain technology to reverse the decentralization. This may not be the actual relevance to the technology since block-chain’s basic nature is decentralization. Bitcoin is the first fully working concept of decentralized money.