Bitcoin is catching up and has been in the news highlight since a while now. With limitless trading options and different forms of currencies available, not many people are aware of the concept of Bitcoin and how it works. These 10 facts will help you understand Bitcoin better:
1. There is no individual entity that controls Bitcoin
Typically, money is governed by a bank or by a central governing agency. The value of the money is pitched based on how it works in the global market and you can have physical control over the currency. However, there is nothing physical about Bitcoin, as it is controlled by all individuals who use Bitcoin and the software is responsible for logging and validating the activities of bitcoin from all over the world.
2. The number of Bitcoins available are finite
The total number of Bitcoins are capped at 21,000,000 from all over the world and there will never be more above it.
3. There is no intrinsic value or predefined value for Bitcoin
When you see the currency of any nation, there will be a predefined value associated with it: Suppose it is a $100 bill, you know that you can get commodities or services worth $100 when you produce the bill. However, bitcoins are just digital pieces of code and are analogous to money, as people still get to trade goods and services for it. As the number of bitcoins in circulation is limited, higher the demand for bitcoin, more will be the value of bitcoins.
4. All the transactions can be seen
Bitcoins is totally transparent and you can see all the transactions and amounts pertaining to the bitcoin, without any personal data. All the information is visible on the blockchain and as it is open to be seen by all, it has a lot of security and trust involved by the users of bitcoin.
5. Mining of Bitcoins is possible
Bitcoin mining is the term used for making use of computer programs for solving mathematical problems and verifying bitcoin transactions all over the world. Bitcoin miners are also paid for verifying the bitcoins and solving the problems.
6. The transactions are not reversal
When you are paying using bitcoins you can’t cancel the payment and the transactions are not reversal, payment cannot be revoked and there cannot be a repeat bill.
7. The fees involved are nil or negligible
When you are sending money to anybody in a different country, you end up paying bank transfer fees, most likely, along with conversion fees. Also, for the transaction to go through, it might take some time. However, when you are paying using bitcoins, the transaction fees are none and the money appears in their account immediately.
8. Digital wallets hold bitcoins
Similar to an online account where you login and check your funds, bitcoins are held in digital wallets, that are created when you sign up. It is similar to physical wallets and if you get locked out of your account, the funds are lost forever. Also, people will not be able to take money from your wallet unless you transfer it to them. You can also check the bitcoins held by an individual if you know of their bitcoin address.
9. If you lost the digital wallet, you lose the bitcoins forever
Although the bitcoins you hold in your wallet will still be in the system as they are linked using blockchain, it cannot be spent when you lose the wallet. As every bitcoin has a unique key associated with it, the bitcoin gets removed from circulation forever, if you end up losing the wallet.
10. Bitcoins can be used for transactions
While some people might still not agree on this, bitcoins can be used to pay in reality for the products and services you buy. There are several retailers – both online and stores, that accept bitcoins. Some of the popular merchants that accept Bitcoin are Newegg, Overstock, Dell, Microsoft and others. The physical stores that accept bitcoins are One Shot Hotels, Holiday Inn in New York and other pizza places, restaurants etc. There are also charities and gambling brands that accept Bitcoin
