Bitcoin – The Booming Digital Currency

Bitcoin – The Booming Digital Currency
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Avyakta Rao

Last updated December 8, 2012


  • 1290 Views
Introduced in the year 2009, Bitcoin is a decentralized, digital currency. Bitcoins were created as an incentive for processing payments, in which users can offer their power of computing for verifying and recording payments that go into public ledgers. This digital currency can be used to make payments for a wide array of products and services. Bitcoin works in the same manner as paper money; however, there are some chief differences between them. Although bitcoin has its physical form, the primary form of this currency is data, due to which it has to be traded peer-to-peer, online with the help of an online service or wallet software.

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Bitcoin can be obtained either through mining or by trading products and services. It can also be bought through normal currency from people who have bitcoins. Bitcoin mining involves running particular software that can perform mathematical calculations for which you get rewarded with a small portion of bitcoin. Once you make some bitcoins you can use them to buy anything that accepts this currency. There are certain cases in which, bitcoin is the only acceptable payment mode and one should acquire this digital currency for completing a transaction.

Acquiring, Storing and Using Bitcoins

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It takes some efforts to obtain bitcoins. Buying bitcoins is easier than mining it, but this comes only at the expense of your hard-earned money. On the contrary, bitcoin mining requires the power of computer processing and is often less fruitful.In order to store and use bitcoins, one requires an online service or wallet software, which needs some disc space and the actual currency can be acquired by locating a bitcoin seller.

Rewards Associated with Bitcoin

Payment Freedom:

  • Receive or send money anytime and anywhere across the globe.
  • No hassles of crossing borders or rescheduling bank holidays for carrying out cash transactions.
  • As bitcoin network does not have any central authority body, you can have total control over your money.
  • Total user-controlled transactions keep bitcoins safe across any network.
  • Bitcoin transactions do not demand personal details of the person who is trading with it.
  • As there is no personal information involved anywhere across the transaction, there is no scope for identity theft.
  • Bitcoin can be encrypted and backed up for safeguarding the money.
  • For trading, Bitcoin can be used only though block chain. Therefore all the transactions made as well as public address of the trader are visible while the personal information is completely hidden.
  • The block chain of bitcoin enables verification of transactions anytime, anywhere.

Security and Control:

  • Total user-controlled transactions keep bitcoins safe across any network.
  • Bitcoin transactions do not demand personal details of the person who is trading with it.
  • As there is no personal information involved anywhere across the transaction, there is no scope for identity theft.
  • Bitcoin can be encrypted and backed up for safeguarding the money.

Transparent Information:

  • For trading, Bitcoin can be used only though block chain. Therefore all the transactions made as well as public address of the trader are visible while the personal information is completely hidden.
  • The block chain of bitcoin enables verification of transactions anytime, anywhere.
Shortcomings of Bitcoin

Lack of Proper Understanding and Awareness:

  • The awareness about the existence of bitcoin and digital currencies are extremely low among people.
  • It is necessary to be educated on bitcoin in order to harness its benefits.
  • The number of organizations accepting bitcoins is extremely low.
  • Lack of adequate knowledge on bitcoin among professionals is another reason which hampers its use.

Volatility and Risk Factors:

  • Bitcoin is highly volatile due to limited availability of the coins, wherein the need for it is growing constantly.
  • At present, the price of bitcoin is persistently bouncing due to the rise in the number of digital-currency based current events.

Bitcoin is Still Developing:

  • Bitcoin is in its infancy stage; therefore some of its features are still being developed.
  • New tools, features and services are still being developed for further securing this digital currency.
  • Bitcoin is not in its final and full potential, and this requires certain modifications and growth
Conclusion:

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So after analyzing the pros and cons of Bitcoin we can say that it is not a perfect currency, however, it certainly comes with ample number of benefits which the physical currency cannot offer. Bitcoin is relatively new and young currency therefore people are just getting aware of Bitcoin slowly and steadily. However, for Bitcoin to succeed, people should gain deeper understanding of the ways in which Bitcoin works, without letting their preconceived notions distort the digital currency concept. References:
  1. http://en.wikipedia.org/wiki/Bitcoin
  2. https://coinreport.net/coin-101/advantages-and-disadvantages-of-bitcoin/
  3. https://coinreport.net/bitcoin-mining/

About the Author

Avyakta is an MSc graduate by education. She is a professional writer in the domain of learning and education. She has completed her masters in Biochemistry from Bangalore University and is currently working as content developer with Simplilearn, which is one of the leading providers of professional certification courses. The courses offered by Simplilearn address the unique needs of working professionals. She has previously worked with a publishing house ande-commerce firm. She is based out of Bangalore and has an experience of 4 years in the field of content development. Her work has been published on various sites related to Project Management, IT, Finance, SAP, Quality Management and more.


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