The function of Bitcoin is similar to the currency function of any country in the world. Basic are:
- Settlement method : They can be used to purchase goods and various services. Everything is paid using ordinary wallets, which is not more complicated than Yandex.Money or Webmoney.
- Savings tools : You can convert rubles and other currencies into Bitcoin and wait for the exchange rate to rise. Therefore, Bitcoin is becoming a good investment choice.
- Medium of exchange : You can easily convert currencies and transfer funds to other users. It’s very simple, just a few clicks.
- Think of Bitcoin as an investment tool : In the long run, it is best to use this option. Because in a short period of time, the exchange rate may rise and fall sharply. An interesting fact is everywhere on the Internet: at the beginning of the system, an American bought a pizza with 10,000 bitcoins. It is now $5 million.
What can you buy?
In the Internet and online services and games, Bitcoin cryptocurrency has become common. They can not only buy the game itself, but also buy game coins and so on. In addition, some companies in countries/regions where cryptocurrency is not banned have begun to use it. Now you can buy air tickets there.
In Cyprus, Bitcoin can be used to pay for tuition. They even train experts in this area. Due to political considerations, attempts to make Bitcoin a popular payment method failed. But you can shop online in some stores.
How it works?
The user creates a wallet for operating his own Bitcoin address. There can be multiple addresses for transactions. Multiple Bitcoin addresses can be used to increase anonymity.
Create an online wallet : A notable feature is the ability to use it on mobile devices.
Make an offline wallet : A program is installed to store BTC on the PC. If you delete or lose access-Bitcoin will not be used and the wallet will not be restored.
Be careful and only trust trusted wallets. There are many swindlers out there. Therefore, bitcoinfarm’s evaluation is not very good. Users suggest to delete it immediately and transfer the money to others.
Bitcoin is a decentralized payment system used to record virtual financial transactions. Developers provide encryption methods to protect virtual currency and its functions. All transactions are conducted publicly.
Cryptocurrency is used to make electronic payments and exchange goods and services. In addition, they can be exchanged into ordinary currencies through special exchanges.
Top 5 cryptocurrency exchanges in 2021:
- Binance ;
- Bittrex ;
- EXMO ;
- LocalBitcoins ;
- Probit .
The payment system is completely decentralized and does not provide for the existence of administrators. The client program with the public source key is the only link between participants.
This means that the user PC is connected to the blockchain through such a client program, forming a peer-to-peer network between them. Therefore, all owners of virtual currencies are mature and execute transactions independently.
No one can manage the system alone. In addition, you cannot influence the change in the number of bitcoins. The new cryptocurrency is randomly distributed among users. The exact time and their number will be known in advance. The calculation result confirmed the legitimacy of the transaction.
Principle of operation
Bitcoin is a record on the blockchain (replicated distributed database) that stores all transaction information. The address of the coin owner is also stored there.
The sender and recipient data is private. Unauthorized persons cannot access them. The blockchain does not provide information about the amount of virtual currency owned by a specific person.
The current amount of cryptocurrencies can be calculated only by the chain of transactions carried out from a specific address. Such calculations are carried out by the client program. But, if necessary, it is possible to calculate the amount of bitcoins yourself.
Advantages and disadvantages of currency
There is competition between different types of cryptocurrencies and payment systems. It also makes sense to compare cryptocurrencies with ordinary currencies because they have the same goals. If you want to get more information on this read below.
The main advantages of cryptocurrency
- Open source: Just like in online banking, similar algorithms work here. Bitcoin theory is absolutely understandable
- Security and anonymity: All transaction information is public. But the data about senders and receivers are reliably classified. Therefore, everyone will know how much money was transferred upon completion. The rest cannot be calculated.
- No inflation: This cryptocurrency is not affected by political forces or any organization. The amount of money is growing at the rate of gold mining. The maximum amount is limited to 21 million bitcoins.
- No commissions: No deductions, taxes and duties are required for certain organizations.
Speaking about the differences from other cryptocurrencies (Litecoin, etc.) – Bitcoin is the most popular and has gained the greatest momentum.
Disadvantages of Bitcoin
- Attempts to ban mining and the use of cryptocurrency: In many states, this is banned. In some countries, the state partially or fully recognizes it. The issuance of Bitcoin and other cryptocurrencies is considered illegal. However, there is still controversy as to whether it is necessary to recognize the importance of cryptocurrency to the modern economic system.
- High volatility: Bitcoin prices can rise or fall sharply. The reason is the news that affects Bitcoin and the reaction of Internet users to them. Therefore, investment risks still exist.
- Limited use: On the one hand, this cryptocurrency can be used in any way, and you can buy anything. On the other hand, you cannot use it in stores, and online stores are not ready to add such opportunities. This depends largely on politics.
- Insufficient cryptocurrency penetration: not many users understand Bitcoin and its main characteristics. Usually people who work in the IT field, as well as economists, brokers, etc., will face it.
The advantages of Bitcoin outweigh the disadvantages of this payment system, but there are currently many problems. This is the uncertainty of the authorities and the low interest of users in the extraction/use of cryptocurrencies.