Benefits and Risks of using Bitcoin as a Payment System?

The Bitcoin price has surged its value to a new all-time high today which has marked above $18,000 in cryptocurrency exchange. Bitcoin has climbed almost 80 percent so far in December,  putting it on track for its best month in percentage terms since December 2013. The market – watchers have opinioned that the value of the bitcoin has leapt this week because of the launch of rival CME Group’s bitcoin futures contracts on Sunday.

Bitcoin

The university studies reported that the surge in the market value of bitcoin would be a threat to financial stability of the traditional currencies and market. The market value of the bitcoin has been moving more calmly from the beginning of this month itself. Bitcoin, the world’s biggest and best-known cryptocurrency is attracting people with the surge in its value. Bitcoin is an open source and public which is not regulated by any government or central Bank and can be used by anyone. As it becomes a threat to the traditional banking system, there come many objections on the usage of the cryptocurrencies. The governor of Bank of Canada has been commented in a speech that the bitcoin make him awake in the night. It was said in a speech titled “Three Things Keeping Me Awake at Night” which he explained about the reasons made him awake in which he confessed finally about his fear on Bitcoin. Fed Chair Janet Yellen commented about the bitcoin’s popularity in previous day that, bitcoin is “a highly speculative asset.”

What is Bitcoin?

Bitcoin is a form of digital currency which has earned more popularity and publicity and has become the top-most among the cryptocurrencies. The creator of the bitcoin is not identified yet which is a mystery in the present day also. In the year 2008, a post was published on the internet titled “Bitcoin: A Peer-to-Peer Electronic Cash System” under the name Satoshi Nakamoto who is unknown now also, believed as the inventor of the bitcoin who has not come to the forefront yet. A rumour was heard that Nakamoto is a Japanese man of 40 years old, which has not verified.

An Australian programmer named Craig Stephen Wright, have come front proclaiming that himself as the creator of the bitcoin which is not accepted by everyone. In 2009, it was released the first Bitcoin software by Nakamoto. And this established the Bitcoin network and the first units of the digital cryptocurrencies, known as bitcoins. It is believed that the work on bitcoin was started in 2007 and with the help of the developers it has developed. Then in the mid of 2010, Nakamoto has given control of the source code repository and network alert key to Gavin Andresen, graduate from the Princeton University and a computer expert. At that time onwards the involvement of the Nakamoto in the bitcoin ended.

How the bitcoin works?

A new user of the bitcoin may not understand the techniques and the technical details involved in the bitcoin. A bitcoin wallet can set up on a computer or mobile phone. The wallet will create your first Bitcoin address, and the addresses can be set up further if needed. And this address can be shared with your friends and to the know persons to whom you want to send or receive the payments. Regarding this, the Bitcoin is like an email in which there is a difference that the address should only be used one time.

how-does-bitcoin-works

The entire bitcoin network uses a blockchain. This blockchain is a shared public ledger which allows the bitcoin wallets to calculate the spendable balances and to verify any new transactions. Cryptography is used by the blockchain to ensure the integrity and chronological order of operations.

We can say that a transaction has been taken place when there occurs a transfer of value from .one bitcoin wallet to another. These transactions are included in the blockchain. A bitcoin wallet uses a piece of secret data which is referred as a private key or seed.  And this key is used to sign the transactions ina bitcoin wallet and to be proof that the transaction had come from the owner of the bitcoin wallet. This signature makes the transaction unchangeable once it has been issued.

Transactions become confirmed through a process known as mining. The mining process ensures proper chronological order, safeguards the network’s neutrality, and allows various computers to agree on the state of the system.

For a transaction to be confirmed, it must be packed in a block which uses strict cryptographic rules to be verified by the network. The mining process also prevents individual control of the blockchain as well as the modification of any blocks.

Some of the Potential Benefits Of Using Bitcoin

In this world, there are numerous other quick payment methods and you may wonder why then also the most of the people elect to use Bitcoin. It is because this digital currency has some potential advantages. They are;

Simple mobile payments: It is very easy to use, the bitcoin never need to swipe a card or to enter a pin. It just needs the scanning of your mobile or two contacts for the transfer.

Quick international payments: Bitcoin allows you to send or receive money instantly without bank delays or special processing fees.

Choose your own fee schedule: The payment of the high fee for the transaction allows you for transaction confirmations fastly. No need to pay for the receiving of bitcoin.

Security: Bitcoin uses military-grade cryptography. If you choose the correct process of the security application will protect your transactions from all kind of fraud activities.

The price will vary according to the variation in the demand for the bitcoin.

The bitcoin has a great value rather than the other metal and paper currencies, where the bitcoins derive their value from mathematics rather than physical properties.

Usage of bitcoin to purchase physical gold and silver has advantages as well as disadvantages also. The primary advantage is its convenience which can make transactions at any time from anywhere without presenting physically on the shop. You can buy it even from your home using bitcoin.

Bitcoin’s future is uncertain. Each and every day the popularity of the digital currency increases at the same time all are eagerly waiting whether it will hit critical mass. As it stands now, most businesses do not accept bitcoins as payment. If the network is disbanded the price of the bitcoin will be lost.

The Future of Bitcoin

Bitcoin was introduced during the financial crises of 2008-2009. At that time the banking facilities were affected and a financial scenario which world was ever seen before. It may happen again. Even though the steps have taken to avoid such an issue, some time the bank may find themselves teetering on the edge of insolvency.

The investors are remembering the issues happened in Greece and taken remedies such as controlling the withdrawals from the ATM machines and all.  Imagine that your money tied up in a bank that you are unable to access. That’s a scary thought to say the least. These all fuelled for the popularity and for the demand of the bitcoin. These issues may have made the people to lost their trust in the traditional form of banking and to turn toward the digital currency like Bitcoin. The bitcoin may change as the future of the commerce as it is convenient and easy to use.

The bitcoin only be around for a few years now around you. And within a short time itself, it has gained its popularity. The physical gold and silver are considered to be the protector of wealth for a thousand of years. But these gold and silver may vary in its value and price according to the variation in the market. In contrast to the paper currencies also it may lose its value over time. The metals may arise problems against a number of economic and geopolitical issues including inflation, declining currency values, erosion of purchasing power and more.

3 Ways to acquire Bitcoins. They are;

  1. You can purchase bitcoins on a Bitcoin exchange.
  2. You can exchange bitcoins with someone else
  3. Earn bitcoins through competitive mining

In each year it is about 21 millions of Bitcoin has been produced. The Bitcoin network is not completely anonymous and does not offer the same privacy as paper currencies. The bitcoin network is controlled and maintained by the network’s users only. Bitcoin has some private keys and the lost bitcoins will not able to retrieve in the case of the lose of the keys. Money is something that is used for the purpose of exchange. The bitcoin is used in the worldwide and of course, it is money. But only the difference is it’s a complete network system. It can be used to buy a coffee or to set a dinner.

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