In the recent days, if you have been watching news channels and going through the social media pages then you must surely have heard about Bitcoin. Bitcoin is the latest sensation that is ringing in everybody’s mind. However not everyone is clear about what exactly is Bitcoin, why and how is it used. Here we are with a very clear explanation of what are bitcoins and what are the pros and cons associated with using these bitcoins.
To start with, Bitcoin was first introduced into the market in the year 2009 by a no-name person who uses an alias Satoshi Nakamoto. Answering the question what are bitcoins, Bitcoins are basically are cryptocurrency used in transactions between people without involving any financial institutions which otherwise function as middlemen. This means the transaction happens directly between two parties which do not reveal their identities or exchange their bank details.
How To Use Bitcoins?
Using bitcoins is not a difficult task. Even naïve users of the internet can understand the functioning of bitcoins. Firstly a bitcoin user has to install Bitcoin wallet on his/her personal device which could be a smartphone or a computer. This installation would create a bitcoin address for the user which can be used for only one transaction. The users need to create new bitcoin addresses every time they wish to make transactions. Users participating in the transactions need to disclose their addresses to make or accept payments. Sounds simple, right? Well, you might be wondering about who is going to keep track of the transactions and update the wallets. A new term comes into the picture in this place called the ‘Block Chain’. The blockchain is a shared public ledger that balances the complete bitcoin network. Blockchain includes all the confirmed transactions that happen, which in turn helps the bitcoin wallets in realizing the spendable balance available to make further transactions. In order to confirm that the transaction involved the real owner of the wallet, a private key or seed (secret piece of data kept by the bitcoin wallet) is used to sign the transactions.
Pros Of Using Bitcoins:
- Money can be sent or received anytime and anywhere in the world.
- Your money is completely under your control without the involvement of any middlemen like banks.
- Personal details need not be revealed to complete the transactions, thus avoiding identity theft.
- Bitcoin blockchain is transparent as it allows anyone to check their transactions at any given point in time.
- Fees involved with exchanging money is very less when compared to other payment gateways. You can even choose to pay more fees if you want to assign high priority to your transaction in the blockchain.
Cons Of Using Bitcoins:
- Bitcoin is volatile, and this is because the amount of coins available is minimal when compared to its increasing demand.
- Bitcoin is not completely developed and has got the need to include new features related to security and accessibility.
- It takes a lot of effort to make the people around the world start using bitcoins, keeping in view the fact that it is still in its infancy stage.
- Bitcoin transactions are irreversible.
Here is all you need to know what are bitcoins and what are the pros and cons of using bitcoins. Though we do not take any stand on whether to use or not use this cryptocurrency, we certainly feel that it needs some food for thought.