Bitcoin is a decentralized digital currency that enables instant payments to anyone, anywhere in the world. Launched in 2008, by a person named Satoshi Nakamoto, it was an initial thought experiment of how a currency can be designed to hedge human society against the likes of the banking crisis that occurred in 2008. Bitcoin uses peer-to-peer technology to operate with no central authority: transaction management and money issuance are carried out collectively by the network.
Given the context of the time in which Bitcoin was released - one in which a recession occurred due to the inefficiency and greed of banks, Bitcoin, by nature is designed to be resilient of the encroachment of banks and governments. Bitcoin is built on the belief that individual wealth is to be owned by an individual and not to be interfered with by third parties.
Unlike conventional forms of currency, once you have protected what is known as a “private” key in context of Bitcoin, no one can access your money. In addition, the number of Bitcoins that will ever exist is limited to 21 million unlike fiat currency (common money) that can be printed as and when desired by central banking agencies. This means the currency, by standard is deflationary in nature. Due to the same, the value of a Bitcoin tends to soar higher over a period of time as it is similar to a commodity that is limited in nature. As the demand for Bitcoin surges, the price of Bitcoin also increases.
What makes Bitcoin so powerful in the world of finance is the underlying technology called the blockchain. Consider an average banking entity. It has the power to edit your financial records at the whim of its fancy and lie undetected. Unlike it, each transaction on Bitcoin is recorded on a globally shared ledger called a blockchain. This ledger is verifiable, accessible and constantly updated by a global armada of computers that are referred to as miners in the Bitcoin ecosystem. This means, once a transaction goes through, and is details are globally recorded, there exists no means for an individual to reverse the transaction or have it hidden. At the same time, Bitcoin requires no identity verification or registering of one’s personal information with a third party. This means, while a transaction can be verified on the blockchain, it cannot be traced back to an individual until and unless he wishes to reveal it.
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