What is BitCoin? A complete guide for beginners

Since the great financial crisis that touched the world between the years 2008 and 2009, was born an incredible monetary system called crypto-currency thanks to the introduction of the first accepted cryptocurrency: Bitcoin.

What is Bitcoin?

Bitcoin composed of the words Bit (Binary Information Unit) and Coin (Coin) is a cryptographic currency and a Peer-to-Peer system

It was developed between 2007 and 2008 and the open-source software is published on January 3, 2009, by a certain Satoshi Nakamoto whose real identity remains a mystery until now. For the record, Bitcoin is an improvement of the concept of B-money, devised by Wei Dai in 1999, and Bitgold, described in 2005 by Nick Szabo.

How does Bitcoin work?

The Bitcoin system is located on the Internet. Anyone can become a Bitcoin user by downloading and installing appropriate software on the hardware of their choice, which can range from a simple smartphone to a complex computer system. Once connected to the system, each user can create any number of accounts and conduct transactions by transferring bitcoins from their own accounts to other accounts.

The necessary functions are included in software called wallets.

Note: The main function of the Bitcoin system is to check the validity of the transactions and to indelibly mark them in a public file called the block or blockchain, where they can be consulted by all but are protected against any modification. This operation is carried out in two stages:

  • At first, some network nodes ( “minors”) are a new block by grouping recently completed transactions and by including a header containing, in particular, the date and time, a checksum ( “hash” ) which will also serve as the unique identifier of the block, and the identifier of the previous block.
  • Secondly, each node adds the new block to its local version of the blockchain, after checking the validity of all transactions therein and their consistency with previously recorded transactions.
  • payment of freedom: indeed with bitcoin, it is possible to be able to send and receive money around the world at any time regardless of holidays, almost instantaneous transactions are very fast from a few seconds to a few hours and without limitation.
  • Low transaction costs: these are almost zero and are pennies, they are lower than those of conventional bank transfer or cost of credit card payment or even the type of money transfer services Paypal or Western Union.
    Security: Users are the only ones able to control the closing of a transaction, the transaction is irreversible which provides protection to the seller who can not undergo repudiation by Buyer after sending the good or service; impossibility for a merchant to charge additional fees without first informing the buyer; it is elusive if it is sufficiently protected; indeed the protocol cannot be manipulated by an individual, an organization or a government.
  • Transactional transparency: all finalized transactions are available and available to everyone on the public blockchain registry; any person can at any time check the transactions; transactional transfers can be traced only from address to address. Preservation of their value against currencies subject to high inflation.

What are the benefits of Bitcoin?

Criticism and risks of Bitcoin

Some critics have been for some time already opposed to cryptocurrencies and bitcoin especially:

  • High volatility: Bitcoin is a volatile currency because the number of coins is limited in the face of growing demand, the price evolves according to the news on crypto-currencies more crypto-currency is floating as any which currency and fluctuates differently in different currencies.
  • Irreversibility of transactions: a validated transaction cannot be canceled.
  • Low user awareness: The use of bitcoin requires some understanding of how the related protocols work.
    Security defects inherent in the technology or the way users are used.
  • Bitcoin is increasingly used by criminal organizations to evade surveillance.
  • Some central banks such as Bank Of America, the Bank of the United States, the Bank of China and banks and investment companies like Deutsche Bank and JP Morgan warn against the use of bitcoin insisting on its highly speculative nature. , on the legal risks related to its non-regulation but also and above all on the risks of its possible use for criminal purposes.

read also: Guide 1: How to Link an American Paypal Account With a Payoneer Account

Bitcoin in the world

Bitcoin has experienced an exponential rise since 2009 the year of its launch until now, starting from $ 0.000764 for 1 BTC in October 2009 for approximately $ 11520 for 1 BTC with a jump of over $ 3,000 between the month of September 2017 to November 2017.

Bitcoin has so far been accepted by several countries (Russia, Brazil, the USA, Japan, Belgium, the United Kingdom, Singapore, the Philippines, South Korea, Australia, New Zealand) whose the most notable are the Netherlands and Luxembourg, which have defined a legal framework to encourage the development of cryptocurrency.

Nevertheless, many countries remain skeptical about the approval of this currency are the case of France, Thailand or China; some countries like Bolivia, Ecuador and Morocco have banned it. As for the African continent, only South Africa has officially authorized the use of this currency.

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