Bitcoin is an open source software that enables a digital payment method or completely digital money. It is a new digital currency that was created on 2009 by unknown programmers in the name of Satoshi Nakamoto. Bitcoin is the first p2p (peer-to-peer) decentralized payment network which can be powered by its users without any middlemen or central authority. So, there will be no transaction fees, and you can maintain your privacy by hiding your real name. It is mostly like the cash for internet for user perspective in the Deep Web. The transactions which are made through it are verified by network nodes and are recorded in a public distributed ledger which is known as the Blockchain. It uses bitcoin as its unit of account.
In terms of total market value, Bitcoin is the largest digital currency on the internet. It is often called as the first cryptocurrency and the first decentralized digital currency, although prior systems existed. It is an open source network, nobody owns or controls it so everyone can take part without any restrictions.
Since this system functions without any administrator or a central authority, its is called as decentralized virtual currency by U.S. Treasury. By having unique properties, it allows rousing uses that could not be identified by any previous payment system.
What is bitcoin based on?
Bitcoin currency is based on either gold or silver. If you give some money to the bank, you will get some gold back. But it is based on mathematics and not based on gold.
- Some people around the world uses software programs that follow a mathematical formula to make bitcoins. Anyone can check it with the mathematical formula since it is freely available.
- It is an open source software; anyone can look and check it whether the process is done or whether it does its work properly or not.
By using peer-to-peer technology, Bitcoin can operate with no central authority or banks. Also, its managing transactions and the issuing of bitcoins is carried out by the network. Bitcoin is open-source, and it will be the public’s design, nobody owns or even controls it, and everyone can take part. Through many of unique properties, It allows exciting uses that could not be covered by any previous payment system.
Bitcoin on various platforms
In the present, Bitcoins are used for many purposes in exchange for money. They buy bitcoins from sites which have official links and use it based on their needs. We have represented the uses of Bitcoin in three different categories.
How does Bitcoin work?
First, you should install a bitcoin wallet on your computer or mobile phone, so it will automatically generate your Bitcoin address, and you can create even more when you need it. To get payment from others or to pay you others or, friends, you must disclose your address to them. Except for your bitcoin, the address should be used only once, and this is similar to how your email works.
Block Chain (Balances)
The Blockchain is a distributed database that keeps a continuously growing list of ordered records called blocks. Each block carries a link to the previous block and a timestamp. Blockchains has high security since it is secure by its design. It is a shared public ledger where the whole bitcoin relies upon. Blockchain includes all confirmed transactions. Bitcoin wallets can calculate the spendable balance, and while spending bitcoins, new transactions are verified which are owned by the spender. With the help of cryptography, the chronological order and the integrity of the block chain are enforced.
Private keys (Transactions)
The transaction includes the transfer of value between Bitcoin wallets that gets included in the block chain. A secret piece of data is kept in the Bitcoin wallets called private key which is used to sign transactions by checking with a mathematical proof that they have come from the owner’s wallet in the Bitcoin Process. The signature also helps to prevent from being modified by others after issuing it. Through mining process, all transactions are broadcasted in the following 10 minutes between users in the network.
Mining is used to confirm transactions in the block chain that are in waiting list by including them. It enforces the block chain in a chronological order which protects the neutrality of the network. Every transaction should be packed in the blocks that fit strict cryptographic rules which will be verified by the network so that it will be confirmed. These rules will prevent previous blocks from being modified. In these ways, no one can control the blockchain or replace the parts of blockchain for their own spends.
Differences in Bitcoin and Normal currencies
Bitcoin can be used to buy things electronically. It means like conventional dollars, euros, or yen, which are traded digitally and most important characteristic are the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network.
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A large bank can’t control their money management so people doesn’t need to worry about showing their records.
Bitcoin for Individuals
Easy Payment in Mobiles
Bitcoin on mobiles allows you to pay by scan-and-pay, that makes with the simple two-step. There will be no need to signing up, swiping a card, type a PIN, anything. Just receive payments to display the QR code in Bitcoin wallet app and let your friend scan your mobile also can touch the two phones together by using NFC radio technology.
Security and control over money
Bitcoin transactions are secured highly by using military grade cryptography equipment. Nobody can charge money and make a payment on behalf of you. So long as you take the required steps to protect your wallet, It can give control over in money including a strong level of protection against several types of fraud.
Works anytime and Everywhere
Just like with email, it can work everywhere at any time without asking your family to use the same software or the same service providers. Let them stick to their favor. No problem will be there, and they are all compatible like they use the same open technology. This network never sleeps, even on holidays!
Fast international payments
Sending bitcoins across borders is as easy as sending them across the street. There are no banks to make you wait three business days, no extra fees for making an international transfer, and no special limitations on the minimum or maximum amount you can send.
For Bitcoins, there will be no fees, and several wallets let you control large a fee to pay when spending. Most wallets have reasonable default fees, and higher fees can encourage faster confirmation of your transactions. Fees are unrelated to the amount transferred, so it’s possible to send 100,000 bitcoins for the fee it costs to send single Bitcoin.
With Bitcoin, it is even possible to send a payment without revealing your identity, almost like with physical money. Also, there is no credit card number that some malicious actor can collect to impersonate you. You should, however, take note that some effort can be required to protect your privacy.
Bitcoin for Business
International payments Quick and Easy
Bitcoin sending across borders is easy as sending across the street. There are no banks to make you wait three business days, no extra fees for making an international transfer, and no special limitations on the minimum or maximum amount you can send.
No PCI compliance required
Accepting credit cards online typically requires extensive security checks with the PCI standard. Bitcoin requires you to secure wallet and your requested payment. Also, you do not carry the costs that come with processing sensitive information from customers like credit card numbers.
Bitcoin also includes a multi-signature feature which allows bitcoins to spent only if a subset of a group of people authorizes the transaction. And this can be used by a board of directors to prevent any member to make expenditures without enough consent from other members, as well as to track which members allowed each payment.
Several organizations are required to produce documents about their activity. Using Bitcoin allows you to offer the highest level of transparency since you can provide information your members can use to verify your balances and transactions. Non-profit organizations also allow the public to see how much they receive in donations.
Bitcoin is also a market that emerges of customers who are new and searching for ways to spend bitcoins and also accept them is a way to get new customers and give your business with new visibility. Accepting a payment method that has often shown to be a practice for online businesses.
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Bitcoin for Developers
Simple Payment System
Unless payment needs to calculated with automatic invoices by accepting money is easy like sending a bitcoin and link or displaying a QR code. This simple setup is within reach of every user and can fulfill the needs of an excellent range of clients. When the process is publicly done, it is especially suitable for transparent donations and tips.
Customer’s financial system
If you don’t use any third-party APIs, you can integrate a Bitcoin node directly into your applications that allow you to become your bank and payment processor. With all the responsibilities that this implies, you can build amazing systems that process transactions however you would like.
Third party APIs
There are several third party payment processing services are there which provide APIs and don’t need to store it on your server and handle the security that this implies. Additionally, most of these APIs allow you to process invoices and exchange your bitcoins into your local currency at competitive costs.
It creates an address uniquely for each transaction. So if payment built in system that associated with an invoice, simply need you to generate a Bitcoin address also monitors for each payment. For one transaction one address only can be used and the same will not be used.
Client Side Security
The security system handled by the protocol which already set by eliminating the need for PCI compliance. Beyond that, keeping it secure is a matter of securing your wallet and using HTTPS or other secure protocols to send payment requests to customers.
New payment possibilities
Bitcoin allows you to design creative online services also as new that couldn’t exist before because of financial limitations. Also including the tipping systems, automated payment solutions, distributed crowd-funding services, time locked payment management, public asset track, low-trust escrow services, micro-payment channels.