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Why is Bitcoin so Important

Started by Sub5, Jun 01, 2019, 10:43 am

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Jun 01, 2019, 10:43 am Last Edit: Jun 01, 2019, 10:49 am by Sub5
1. Decentralization (Technically, nobody controls it)

Bitcoin's most important characteristic is that it is decentralized. No single institution controls the bitcoin network. It is maintained by a group of volunteer coders, and run by an open network of dedicated computers spread around the world.

This attracts individuals and groups that are uncomfortable with the control that banks or government institutions have over their money, further increasing the use and potentials for people looking to go into this line of business.

2. Limited supply (The scarcer, the valuable)

Fiat currencies (dollars, euros, yen, etc.) have an unlimited supply - central banks can issue as many as they want, and can attempt to manipulate a currency's value relative to others.

Holders of the currency (and especially citizens with little alternative) bear the cost.

With bitcoin, on the other hand, the supply is tightly controlled by the underlying algorithm. A small number of new bitcoins trickle out every hour, and will continue to do so at a diminishing rate until a maximum of 21 million has been reached.

This makes bitcoin more attractive and scarce as an asset - in practice, if demand grows and the supply remains the same, the value will increase.

3. Pseudonymity (identity is secured)

While senders of traditional electronic payments are usually identified (for verification purposes, and to comply with anti-money laundering and other legislation), users of bitcoin, in theory, operate in semi-anonymity.
Since there is no central "validator," users do not need to identify themselves when sending bitcoin to another user.

When a transaction request is submitted, the protocol checks all previous transactions to confirm that the sender has the necessary bitcoin as well as the authority to send them.

The system does not need to know his or her identity.

Furthermore, most exchanges are required by law to perform identity checks on their customers before they are allowed to buy or sell bitcoin, facilitating another way that bitcoin usage can be tracked.

Since the network is transparent, the progress of a particular transaction is visible to all.

This makes bitcoin not an ideal currency for criminals, terrorists or money-launderers.

4. Immutability (Go anywhere and everywhere)

Bitcoin transactions cannot be reversed, unlike electronic fiat transactions.

This is because there is no central "adjudicator" that can say "ok, return the money." If a transaction is recorded on the network, and if more than an hour has passed, it is impossible to modify.

While this may disquiet some, it does mean that any transaction on the bitcoin network cannot be tampered with.

5. Divisibility

The smallest unit of a bitcoin is called a satoshi.

It is one hundred millionth of a bitcoin (0.00000001) -at today's prices, about one-thousandth of a cent.

This could conceivably enable microtransactions that traditional fiat money cannot.

Source: Digital market


Jun 01, 2019, 10:43 am Last Edit: Jun 01, 2019, 10:49 am by Sub5