What is Bitcoin? || In Layman Terms

shashankgupta (44)in #bitcoin • 7 years ago

What is Bitcoin?

Bitcoin is a relatively new form of currency that is just beginning to hit the mainstream, but many people still don't understand why they should make the effort to use it.

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Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.

It’s the first example of a growing category of money known as the cryptocurrency.
Bitcoin is a digital asset and a payment system. It is commonly called a decentralized digital currency.
It was invented by Satoshi Nakamoto in 2009. However nobody knows the true identity of satoshi nakamoto.
It is an open source software. This means, that no person, company or country owns this network just like no one owns the Internet.
The system is peer-to-peer, that is, users can transact directly without an intermediary like a bank, a credit card company or a clearing house.
Transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain.

Now the question is, Why Bitcoin is better than local / fiat / Traditional Currency?

It's fast

Paying by cheque, international money transfers and other traditional forms of payments takes a long time, generally a couple of days.
Credit cards are instant to pay. But it takes longer for the merchant to receive the money in their account.
With Bitcoins, transactions are almost instantaneous. Bitcoin is one of the fastest way to transfer money.

It's cheap

For all existing forms of payment, you have to pay a fee to the bank, credit card company or the payment processing company.
With Bitcoins, the transaction fee is minimal and cheaper than all traditional payment systems. For micropayments, Bitcoin is the first feasible payment system.

Central governments can't take it away

Do you get the feeling that the frequency of news about currency devaluation in one country after another is increasing? That's because it's true. When that happens basically the country's population pays for the mistakes of the banks by losing the value of your wealth.
Bitcoin is decentralized. No central authority has control over it. So no one can devalue it.

There are no chargebacks

For merchants using credit cards, especially for merchants selling digital goods, chargeback is a substantial risk.
Bitcoin transaction once done, cannot be reversed. This avoids chargeback frauds.

People can't steal your information from merchants

You must have heard that your personal information has been stolen from large retailers and companies. This is because when you pay by credit card, the merchant has all your personal information.
Bitcoin transactions are like cash. You can send Bitcoins without giving your personal information.

It isn't inflationary

Your local currency is issued by your country's central bank (In India its RBI). Normally they print more money than they earn which is why your money loses value and things become more expensive over time. Your currency is inflationary.
Bitcoin's generation mimics precious metals like gold. It gets more expensive to generate Bitcoins with time just like gold. Bitcoins supply will always be fixed and limited.
As more and more people adopt Bitcoins, its value will go up and the price of things in Bitcoins will go down.

It's as private as you want it to be

Bitcoin is like cash. It's private, just like the way payments should be.
On the other hand, the Bitcoin ledger is transparent. Everyone can see the transactions happening in the Bitcoin network. However, the transactions cannot be directly linked to a person or a company.

You don't need to trust anyone else

In traditional payment systems, you have to trust a central authority like a bank or a payment processing company.
With Bitcoins, you or the recipient do not need to trust anyone for the transaction. When a transaction is done, computers all over the world verify the transaction within a short time.

You own it

With traditional money, you never own the money. It's either owned by the bank or by the payment processing company. If they decide to freeze your accounts, you cannot do much.
You have control over your Bitcoins. You own your Bitcoins.