Bitcoin’s potential to impact the way we use money

Bitcoin is a digital currency that was invented in 2009 by Satoshi Nakamoto an internet user whose identity remains inconclusive. It is a form of currency where transactions can be made without a 3rd party and without fees. People see value in the money free from government regulation and is used as a tool for anonymous transactions.

Centralized vs decentralized transactions

Usually, a transaction between buyer and seller have been controlled under a federal payment system, meaning that there is an intermediary between them, more precisely a bank to ensure the payment process. However, Bitcoin operates using a decentralized payment system meaning that transactions between a buyer and seller are direct and are dependent on copies registered and distributed to all networks that are Bitcoin users around the world who can confirm of any alterations. This makes registered copies more secure when compared to a centralized system which depends on one individual to secure and fix any errors of transactions. As digital currencies surface, the preference for a decentralized system would condense the use of banks as an intermediary. This raises many questions regarding the role of banks. The impact of digital currency is not being taken lightly. Many banks have noted that Bitcoin could disturb the ability of banks to control and regulate the economy as well as how money is distributed.

The good and the bad

Bitcoin is extremely secure. It would take state-level budgets to be able to attack the network. Also, there is no reason to attack the network since by doing so you would be losing money. Example: If you were to collect 50% of the hash rate without being noticed, would you want to attack the network or keep the billions per year that you would be able to earn? As you can see, what would be the point? If you trust in the code you don’t need to worry about bank fraud. Since there is no one in control, anyone can get an account, send and receive buy or sell. Also, when you buy Bitcoin, you can be certain that it will be of greater value in the future because there’s a fixed supply. It is easy to inspire saving in Bitcoin because it will be worth way more in the future.

Sadly, something good must come with something bad as well. Even though Bitcoin is one of the most secure of systems, if someone pockets your Bitcoin you will never see it again. You are the only one responsible for your own security and many fail to take this job seriously.

 

 

 

bitcoin
qz.com

 

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