What is bitcoin is a question for many people today. Bitcoin or what is known as digital currency is quite in demand. This is because Bitcoin is considered a very promising digital business opportunity today.
Bitcoin is a global cryptocurrency digital currency system, also known as virtual money or Crypto assets. Bitcoin is electronic money that can be used for future investments.
Bitcoin allows you to send or receive money only via the internet.
What is Bitcoin?
What are Bitcoins? Bitcoin is a type of digital currency that was created in January 2009, precisely during the housing market crash. An explanation of what Bitcoin is, of course, is incomplete without mentioning the name of its founder, namely Satoshi Nakamoto, who is a pseudonym. Until now the identity of the person who created Bitcoin is one of the unsolved mysteries.
What is Bitcoin is a question that is heard quite often lately. Bitcoin is a digital currency that is used and distributed electronically. What is Bitcoin can also be answered with Bitcon as a decentralized peer-to-peer network. That is, there is no one institution or person who controls it. Bitcoin is a currency that is not issued or endorsed by any bank or government.
Bitcoin is a type of cryptocurrency. The balance of Bitcoin tokens is stored with a public and private "key", and is a long combination of numbers and letters linked through the encryption of the mathematical algorithms used to create them.
The public key (equivalent to a bank account number) serves as the address that is published to the world and to which other people can send bitcoins. The private key (comparable to an ATM PIN) has the function of a guarded secret and is only used to authorize Bitcoin transmissions.
What is unique about Bitcoin currency is that there is no physical form, only balances are stored in a public ledger whose access is transparent for everyone, and all transactions using Bitcoin are verified through various systems.
The difference between Bitcoin and state currencies is that it has a limited supply, unlike national currencies, which can be continuously issued by the country's central bank. Bitcoin only has a total supply of 21 million which is controlled by the underlying algorithm.
Transactions of Bitcoin and other crypto assets are also irreversible, which of course is different from national currencies. The Bitcoin system also does not have a central validator which makes you a semi-anonymous user. If you make a transfer or transfer, the system only checks if you have Bitcoins to send and doesn't check your identity.
What is Bitcoin certainly has an interesting side, so many are interested in it. There are several promises made by Bitcoin. One is the promise of lower transaction fees when compared to traditional online payment mechanisms and operated by a decentralized authority.
How it Works and Terms in Bitcoin
What is Bitcoin, of course, you need to know how it works and the terms in it first. Maybe how Bitcoin works is an interesting thing that needs to be discussed. Each Bitcoin is a computer file stored in a digital wallet on a computer or smartphone. To understand how bitcoin works, it helps to understand the following terms and their explanations:
Blockchain. Bitcoin is backed by an open source code known as Blockchain. Its function is to create a shared public ledger. Each transaction is a "block" that is "chained" to code, creating a permanent record of each transaction. Blockchain technology is at the heart of the more than 2,200 cryptocurrencies created after Bitcoin.
Private and public keys. The bitcoin wallet contains a public key (equivalent to a bank account number) and a private key (equivalent to an ATM PIN), then will cooperate in enabling the owner to digitally sign transactions, and will also provide proof of authorization.
Bitcoin Miner. Miners or members of peer-to-peer platforms, independently confirm transactions using high-speed computers, generally within 10 to 20 minutes. Miners are paid in Bitcoin for the effort made.
Advantages of Bitcoin
There are also some advantages in using Bitcoin are:
Secure private transactions with minimal fees
If you already have bitcoins, you can transfer them anytime, anywhere, reducing the time and potential costs that could arise from any transaction. The transaction process does not contain personal information such as names or credit card numbers, and eliminates the risk of consumer information being stolen for fraudulent purposes or identity theft.
Huge growth potential
Some investors buy and hold a lot of this currency, with the bet that if the trust and use of Bitcoin increases in the future, the value of bitcoin will also grow.
Avoid traditional banks or government intermediaries
Due to the financial crisis and the great recession, some investors want to embrace decentralized alternative currencies, which are outside the control of ordinary banks, government authorities or other third parties.
Bitcoin Disadvantages
In addition to the advantages of Bitcoin, of course there are also some disadvantages of Bitcoin are as follows:
Unstable price
The 2017 bitcoin price hike was driven by speculators rushing into the Bitcoin market, as NerdWallet staff writers discussed at the time. This gain is good news if you bought bitcoin in December 2018. Because those who bought Bitcoin in 2017 when the Bitcoin price shot towards $20,000 still need to recover from the losses suffered.
Limited use
In May 2019, telecommunications giant AT&T joined forces with companies like Overstock.com, Microsoft, and Dish Network to start accepting payments with Bitcoin. However, these companies apply some exceptions that are not in line with company rules.
Not SIPC protected
SIPC (Securities Investor Protection Corporation) or a company that protects securities investors, will usually insure investors up to $500,000 if the broker fails or funds are stolen. However, the insurance does not cover cryptocurrencies like Bitcoin.
Hacking risk
While the blockchain technology behind Bitcoin is believed to be more secure than traditional electronic money transfers, Bitcoin wallets have become an attractive target for hackers. For example, in May 2019 it was stated that more than $40 million in bitcoins had been stolen from several high-value accounts on the cryptocurrency exchange Binance.