Money acts as a medium of exchange in the process of transaction. Money gives value to the transaction. It is the core and essential part of business transaction. There are various forms of Money. Among them, there is a an electronic cash system, commonly known as Bitcoin currency. Bitcoin is an innovative payment system that is not controlled by any intermediary. It is a cryptocurrency that came into existence in year 2009 by a group of anonymous people using the alias “Satoshi Nakamota”. Bitcoin currency is a type of virtual currency that serves the purpose of traditional currency electronically.
HOW ARE BITCOIN CREATED
Bitcoin currency is not like fiat currency. Factually, bitcoin is not a currency as its value are not stable. But, it is used as currency to facilitate the exchange process among the users. Bitcoin is a cryptocurrency which uses cryptography to secure and facilitate the exchange process among the parties.
Bitcoin currency is created by process known as Bitcoin mining. Just like precious metal gold is mined, bitcoins are also mined by bitcoin miners. Bitcoin acts as the reward to miners for processing transaction and securing the network. The miners uses specialized software for this purpose.
WHY BITCOIN ?
In the year 2008, after the collapse of financial system, the major flaws were seen. The existing system had various issues like untrusted third party, improper fees, etc. Also, the present system wasn’t efficient enough to tackle the situation. This lead to the emergence of decentralized digital currency known as Bitcoin
Bitcoin was able to serve all of the above mentioned issue. It could transfer the amount at low to nil transaction cost. Also, the users are able to make the payments globally.
Following are the advantages and reasons for using bitcoin currency as the medium of exchange.
- Fast and cheap to use- the transaction using bitcoin is fast as compared to transactions from others. Also, it is cheap. The transaction cost as mentioned above is low to nil
- private- the transaction using bitcoin currency is completely private as it does not involve the role of central government. The transaction happens purely among the parties without the role of third party.
- Transnational currency- bitcoin currency allows the user to make the seamless transaction globally.
- Impossible duplication– the transaction results in transfer of ownership of bitcoin immediately which can not be duplicated.
- Peer to peer transaction– the parties makes the transaction over the internet without the role of intermediary.
- Secured– the user can only access its account or check his balance using private key which is secured by password.
- Great for the purpose of investment– just like Gold, bitcoin currency is also a good way of investment. The user can use it anywhere or in part of world without converting into actual cash.
- Ease of online shopping– using bitcoin wallet, the user can use the bitcoin for the purpose of shopping online without any trouble.
- Less volatile– bitcoin is globally available and accepted. This makes it less volatile as compare to cash or fiat currency. This feature makes bitcoin the best way to make transactions across the boundaries and also online.
- Ledger– blockchain is the underlying technology behind the bitcoin. The cryptographic techniques makes the permanent records of every single transaction. The records are permanent and any person across the world can access them.
- No real way of tracking cash- as the transactions occurs in the form of bitcoin therefore, the real cash is untraceable.
- Anonymity– the parties makes the transaction without sharing their details with each other. They remains anonymous for each other, known by the user name that they provide in their account.