Has the time finally arrived for this, a worldwide decentralized digital currency which eliminates the middleman, thus not having to pay any transaction fees, while it manages to keep its users completely anonymous and secure from breach.
Overview Of Bitcoin
Imagine if you walked into your local diner and ordered a sandwich and soup. You hand over a few dollar bills to pay for the meal. You are then asked by the cashier in order to complete the transaction, you’ll also need to provide your full name, your billing address, phone number, your mother’s maiden name, as well as your banking information.
We would all balk at these demands just for buying lunch, and yet this is exactly how everyone currently pays for any goods or services which we purchase over the Internet, there’s no other option.
There currently isn’t a monetary payment system on the Web which is as straightforward and completely transparent as the paper dollar bill. Anyone, regardless of who owns that dollar bill, in real life, provided it’s not counterfeit, can use it to purchase anything that they want, without question or verification.
On the Internet, instead, we’re forced to rely on financial surrogates and institutions such as credit-card companies like Visa to handle our transactions for us, and this of course for a percentage fee of the sale. We’re also required to surrender a lot of our personal information as well.
Bitcoin Wanting To Provide A Worldwide Liquid Currency
This system of Web payment could potentially change however with the hopes of Bitcoin, (www.bitcoin.com) which is a complete digital P2P currency on the Internet, that’s aiming to be as liquid and as anonymous as that paper dollar bill.
It works exactly like if you were taking a dollar bill, folding it in half and then somehow jamming it into your computer, and then being able to send that currency anywhere over the Web to anyone you want, anywhere in the world, this according to the Bitcoin network.
Bitcoin, which is a virtual currency, are bits—strings of code which can be transferred from one Internet user to another, this over a “peer-to-peer” network.
Whereas the majority of bits-strings are currently able to be copied ad infinitum, which is a property that would render the currency worthless, users of Bitcoin are only able to spend a single Bitcoin just once, then it becomes “spent” to the sender, and currency to the receiver.
Strong unbreakable cryptography protects the Bitcoins against any potential thieves or hackers, while the peer-to-peer network would eliminate the need of a central gatekeeper, such as PayPal or Visa, who charges a commission or fee for each transaction.
What the Bitcoin system does is it empowers the users by placing complete power into the hands of the currency user and not the financial middlemen. Bitcoin borrows the concepts from some of the most well-known cryptography programs.
What the software does is it will assign every Bitcoin user with two unique codes:
First, there’s a private key which is completely hidden on the user’s computer, and there’s a public address which everyone else can see. The key on the computer and the public address are mathematically linked together. Attempting to “crack” someone’s key on their computer from their public address is practically impossible according to Bitcoin.
So if you happen to own 50 Bitcoins and are wanting to transfer them to a friend, or if you’ve just made a purchase from a retailer, what the Bitcoin software does is it will combine the hidden secret key on your computer with the merchant or your friend’s Bitcoin address.
Other users on the Bitcoin network will use the relation between your public Bitcoin address and your private key to be able to verify that you actually own a certain amount of Bitcoins that you’re wanting to spend, and are able to transfer to them by using a code-breaking algorithm.
Bitcoin Baby Steps
The first computer which completes the calculations is awarded a few Bitcoins every now and then, this in an attempt by Bitcoin to recruit a diverse collection of online users to maintain the system.
The first actual Bitcoin purchase was a restaurant transaction for a sum of 10,000 Bitcoins. Since then, the actual exchange rates between a Bitcoin when compared to the U.S. dollar has bounced around all over the scale.
Since the Bitcoin currency is extremely volatile at this time, there are just a few online merchants who currently accept payment in Bitcoins. So at this point, the community that is Bitcoin is extremely small but enthusiastic, and hoping for a better day, this much like the early adopters of the Internet or Paypal when they were in their infancy.