Bitcoin: What do we really know?
// Par Bouzeboudja Ghania//
In 2020, most people have heard of Bitcoin -or as it is mostly known ‘BTC’- but most of us don’t really know what it is and more important don’t understand how it works. So let’s try to explain quite simply the basic mechanism behind what is considered by some to be one of the greatest inventions of the 21st century.
What is Bitcoin (BTC) ?
Let’s start with the beginning. Bitcoin in one of the first cryptocurrency ever created and is the most popular and largest by market share at the moment, the only other cryptocurrency coming close to BTC is Ethereum.
It was created in 2008 by an anonymous developer named “Satoshi Nakamoto” and is the name of both the digital currency and the technology behind it, which is a network of independent computers called the blockchain and working as a giant accounting book. BTC is a decentralized currency (no central bank) aiming to suppress the intermediaries in transactions, the interest fees of traditional bank and to grant more transparency to its users. Indeed transactions are made from and to a character encrypted address so that only the owner of the address can transfer the funds. As the transactions are all written on the online accounting book, it grants a total transparency to all the users. BTC have underwent a tremendous evolution during the past decade, its value rose from around 0,30 us dollars in 2008 to more than 7500 us dollar in 2020 and appears to be a huge opportunity with more and more companies and stores accepting the currency as payment method among which some really important ones like PayPal and Microsoft.
How do we use it?
If understanding BTC is undoubtably hard, using it in an daily basis seems much easier. First of all, you need to download a wallet software on your computer or phone to buy, receive and sell cryptocurrencies. Afterwards you deposit your money into an online exchange platform connecting buyers and sellers and make transactions to buy BTC with your currency. Buying BTC is not the only way, you can also sell and ask to be paid in that currency. Any exchange of Bitcoin uses both part’s signatures -long line security codes encrypted with 16 different symbols- as you basically send money to the other part’s address using the app or receive its money to your address. To send money you need your signature key working just like your bank card code but all transactions are strictly anonymous as you don’t use any personal information. Transactions are fast as it takes approximatively 10 minutes for every transaction and the technology can deal with a transaction every 7 second which is more than enough regarding the number of users. They are also global as your geographic location doesn’t have any impact on your transaction.
However, using BTC also means taking a risk because all transactions are irreversible, which means that NOBODY can reverse a transaction. So basically if you make any mistake in the addresses or if any thief hacks your account, there is no way to ever get your money back. BTC is therefore known for the numerous scams and hacking occurring every day.
To ensure some safety for your transactions it is recommended to rely on Bitcoin ATM (automated teller machine) such as BTER or Coin Coin.
What future for this currency?
Opinions regarding the future of Bitcoin differ a lot. Some believe it won’t grow much more while other believe it will slowly replace current currency.
First of all, let’s talk about a possible crisis in a near future.
We must keep in mind that just like for any other bubble, the crypto bubble is bound to explode at some point. However, according to some analysist, this bubble could do just like the internet bubble. Indeed after the internet crisis, giant such as Google and Microsoft did find a way to overcome the crisis and become part of the most powerful actors in the modern world.
The second major obstacle to the BTC’s growth and prosperity is :Government. Indeed, BTC, just like any other cryptocurrency is based on anonymity and irreversibility which makes is unsecure for users but also a possible threat as it gives anonymity for possible criminal transactions. Also, it makes any tax almost impossible on transactions and thus is a major concern for governments which will need to find a way to regulate transactions for both security and collecting taxes.
Last but not the least, BTC may seem easy to use but is actually only understood by a small minority and most people are not able to deal with some complicates procedures such as for example transfer your BTC from a computer or fight against hackers. Furthermore any mistake could cost you everything as just a wrong “copy paste” could make you lose all your money. Basically, as long as Mr average cannot use easily BTC, it won’t be able to spread much more and therefore, it must get easier to use.
To finish on a more positive note, BTC could be a long-term solution for developing countries or both make transactions more transparent and tackle corruption, but also to escape from the dollar domination as the world leading currency.
So in a few words, buying and selling Bitcoin is something that almost everyone could do, at least in looks because in facts, not only do you need to understand markets and finance but you also need skills in IT.
So before starting any journey in the Bitcoin world, make sure to know what your doing and don’t ever invest the money you need to survive, only go with the money you could survive without.