Uncategorized September 17, 2021
First, what exactly is Bitcoin? Wikipedia describes it as a public electronic money that is issued and managed over the Internet. In simple terms, it’s “virtual money” that is transferred over the Internet between users. It is also known as “online currency”. The best way to describe it is that instead of dealing with a government or an institution of finance, when you make an online transaction, you’re exchanging money directly over the Internet and there is no third party involved.
Let’s look at the way that a typical “real-world” wallet functions. When you transfer money from your “real world” account to your” bitcoin wallet” that is in essence transferring the money from your wallet to your recipient’s wallet. The process is quicker and simpler because you don’t have to deal with intermediaries. A typical transaction would be this: I give you my email address, you give me your telephone number and you send me your email address. Therefore, all that is happening is that we exchange something (your email address) in exchange for something (your phone number).
Now let’s take a look at how something like a real world currency works. Let’s suppose that I’m looking to purchase a cup of coffee as I’m in town for a business event. To purchase the coffee I’d need to first open an account at the local coffee shop. I could then keep my coffee until I arrive and then pay using my actual bank account.
Let’s say I’m traveling to a place without access to a bank system, such as London. What should I do? Simple, as the bitcoin network functions as an electronic currency, I can purchase my fuel using any digital currency I want to use. If I want to travel to London using the pound, I can use the Euro or the USD. This is one of the advantages about it. Although it may have a high currency rate however, there is no central government to regulate these currencies. It is an extremely secure currency since there aren’t any known threats.
What happens between all these transactions? The transaction is actually conducted by all the entities involved with the transaction, also known as “miners”. These entities are what ensure that everything is running smoothly. The “mining process” is the process that makes transactions go through and ensures that the network is secure. This is achieved by inviting people to join the bitcoin mining pool. They pool their resources and boost the speed at the that new blocks are mined.
So now we know what goes on behind the scenes, how can one know if they’re being “minted” or whether their transactions are monitored? There is actually a new technology in place known as “blockchain technology” which aims to make the entire mining process transparent. The process is this way: when someone mines a new block, they add it to the ledger they already have which is known as the “blockchain”, along with all other transactions that took place during the time. Every transaction is recorded and logged on to the computer system for the specific ledger. This allows you to see exactly how many transactions someone has completed and the way they are spending them.
It sounds great in theory, but there is one important issue with this system that everyone needs to be aware of. Since there isn’t a physical product, there’s no way for people to actually look into the history of transactions made by a person. If they find something suspicious, they can report it, but since the transaction is recorded on the Blockchain it is not verified whether or not it’s valid. The only way to safeguard transactions is to use an offline computer such as an offline paper wallet. There are even online websites that will do this for you, if you don’t want to perform your transaction from the internet.
The bitcoin transaction system is basically a protocol that people use to ensure that they can be traced via their transactions. This makes it almost impossible for someone to double spend or alter someone else’s transactions without being able to see. This new technology isn’t compatible with all computers, and so some of today’s most prominent names in the field aren’t getting the chance to make the leap to the next era of computing power. However, there are a lot of developers trying to create software that will allow even the most basic computers to make transactions on the internet. When the protocols are made accessible to the public it will be much easier for people to transfer cash from one wallet into another and to use their computing power in order to drive around the globe using bitcoins instead of traditional currencies.
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