An overview of Bitcoin – Despite the tremendous amount of craze trade cryptocurrency in India has garnered, they are still presumed to be in their nascent stage. The journey of cryptocurrencies started with the commencement of Bitcoin back in the year 2009, exact origins are still unknown. However, the concept of Bitcoin was first published in a research paper by an anonymous person by the name of Satoshi Nakamoto in 2008.
As you might be aware, Bitcoin is a digital currency and it uses encryption techniques to regulate the generation and transfer of money. Unlike fiat currencies such as Euro or USD – they are completely dependent on central banks, but Bitcoin on the other hand operate independently.
Now, this brings us to the question – are Fiat currencies better than cryptocurrencies?
Before jumping to any conclusion, let us first understand what fiat currencies are.
This is a currency issued by the government and regulated by a central authority, and that is not backed by a commodity like gold. Cryptocurrencies and fiat currencies are similar in a lot of ways, both can be used for performing transactions and exchange of money. Moreover, both of them depend on widespread consumer trust. On the contrary, fiat currencies completely rely on the central bank for their value creation, unlike Bitcoin.
US Dollar, Euro, Pound are some examples of fiat currencies, and they are more prone to become worthless because of hyperinflation. Digital cryptocurrency Bitcoin can be received and spent by anyone, without the need for a bank or a government, and that makes it exceptional in its own way.
Understand the components of Bitcoin
‘Public ledgers’ are a significant component of Bitcoin, it is where the confirmed transactions are stored in the blockchain. They make sure that digital wallets can determine spendable balance accurately. The second component that plays a crucial part is ‘transactions’, this denotes the transfer of funds between two digital currency wallets in India.
When a transaction occurs between two participating parties, wallets are used as an encrypted electronic signature. Then comes the last process, ‘Mining’. It is a process of confirming transactions and generating new blocks and adding them to a public ledger. This gives value to the coins and is known to be a proof of work for Bitcoin.
Bitcoin, a medium of exchange
As we have covered earlier, Bitcoin is a medium of exchange and doesn’t require a third party involvement and gives you complete control over your digital assets. Bitcoin functions as a form of payment in several ways such as goods and services, in-store and online.
In the present scenario, Bitcoin has become the most desired digital asset, in addition to a store of wealth. However, for it to be adopted by everyone, it needs to be used and spent so that users can purchase, gain and spend on whatever they want to for their varied purposes.
Another big thing that is gaining a lot of traction is crypto debit cards. Their aim is to transform financial services while making improvements in transaction speed, cost, and privacy. They work just like any other debit card, easy functionality, and you can even swipe them at card terminals. They are often used by traders and miners, and long term holders.
If you are wondering what was the need for cryptocurrencies, kindly note that the notion of the central bank’s control over the economy and rise in global prices was one of the major reasons behind it.
Only a few users refer to Bitcoin as digital gold as it has several properties just like it and serves as a globally recognised store of wealth. However, the only thing pushing Bitcoin back is the lack of regulations, it hinders its mass adoption. Here’s hoping that all of this is regularised soon.