Technology is changing everything. From the way you do your shopping, paying for them, selling your products, and even attending your class. Almost every aspect is going the digital form. In fact, recently, companies are adopting the use of chatbot in handling their customer service. Soon, you will be chatting with bots thinking you are dealing with a fellow human.
Nevertheless, the technology is not only changing the way you pay for goods or services. The mode of paying- currency- is also going digital. Digital currencies are pumping up in the market. A good example of these currencies is the Bitcoin.
So, what is a Bitcoin?
As mentioned earlier, Bitcoin is a form of virtual currency. This means that there are no physical forms of Bitcoins. Instead, it is applied to transact in the virtual platform. The Bitcoin invention took place in 2009. Surprisingly, no one knows the person behind it.
However, a developer by the name Satoshi Nakamoto is thought to be the first person to handle them after which he disappeared. Also, for your information, Bitcoin was the first cryptocurrency.
What do you mean by cryptocurrency?
Simply, cryptocurrency is a digital currency. They consist of computer-generated codes that have monetary value through a process of mining. Mining combines the use of high performing computers and electricity.
Who controls Bitcoins?
Unlike the conventional currencies whose use is regulated by commercial banks and other financial players, no one controls Bitcoins. Also, no government or regulatory agency has control on the usage or circulation of these coins. When you transact with this digital currency, they move from the payee to the receiver without passing through intermediaries. Hence, there are no transaction fees charged.
With this in mind, the next question would be: since no bank or regulatory agency has a hand on controlling this currency, how is it stored. (Normally, you take your cash to bank for safer custody).
Storage of Bitcoins happens into forms. The first kind is known as cold storage. In this type, your PC or mobile device acts as your bank where you store the coins offline. Here, you create a digital wallet that is similar to a virtual bank account.
Through this wallet, you can send, receive or store Bitcoins on your PC or mobile device. The next form of storing this coin is the hot storage. Here, you create a cloud-based Wallet and use it in the same way you will do when you store them on your computing devices.
Pros and cons of Bitcoin storage forms
Each of the two storage forms has its pros and cons. First, when you store your coins on your computing devices, you limit other people from accessing them. Hence, your Bitcoins will be in safe custody. However, you can easily lose them if you lose your device through being stolen; when malicious viruses attack your PC, or accidentally delete the wallet containing them.
On the other hand, using the hot storage enables you to avoid losing your coins due to misfortunes on your PC or computing device housing your Bitcoin wallet. But it is not safer from online attacks. Regularly, hackers are targeting cloud Bitcoin wallets due to the escalating Bitcoin prices.
How do you transact with Bitcoins
One surprising aspect of Bitcoin transactions is anonymity. When using these coins, you do not need to disclose your real name. All you require is the username or email of your Bitcoin Wallet. Hence, it is not easy to trace the Bitcoin users. For this reason, most people are using it to conduct illegal business such as selling drugs online.
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