In late 2021, an unknown person or group launched an anonymous online ledger called the Bitcoin ledger. Launched by its anonymous inventor Satoshi Nakamoto, Bitcoin quickly recorded secure transactions on a highly secured, decentralised Blockchain-a public network of servers maintained by a network of participants. The main aim of the system was to provide a solution to problems associated with the then popular world of online banking. One of these problems was money transfer, which had previously been handled via complex intermediaries such as PayPal and Google Check Out. However, because the system is entirely based on peer-to-peer transactions, it is theoretically immune from outside influences such as viruses and hackers.
By transferring their money through the Blockchain, users are provided with a highly cost-effective and tamper-free way of sending funds to each other. Transactions made using bitcoins are recorded in a public ledger called the block chain, maintained by all participants in the system. This method is highly efficient as it guarantees that no extra coins or currency will be destroyed as a result of a fraudulent transaction. With just one click of the mouse, the buyer can have access to his funds instantly instead of waiting for days or even weeks for a check to clear. Transactions are recorded both in real time and in the log of previous transactions, allowing users to check whether they are receiving money into their accounts.
Transactions are grouped into blocks
Transactions are grouped into blocks, each of which are regularly mined by the central database. Each block contains a reference to the previous block, and once this chain is fully mined, this will be the next reference in the chain. This ensures that the entire transaction history of the Bitcoins has been followed, and therefore there is no possibility for fraudulent transactions to take place. Since each transaction is separately identified within the chain, not only is the transaction fully secure but also the likelihood of it being fraudulent is practically zero.
Bitcoins also have some drawbacks
Despite its unique characteristics, bitcoins also have some drawbacks. Unlike traditional monetary systems, bitcoins lack a national currency and its supply is fixed. Another disadvantage is the high transaction fees levied on the users of bitcoins. Since most transactions are smaller than conventional monetary transactions, the extra fees add up quickly and can quickly overtake the savings an individual may have. The use of bitcoins as a mode of payment is still not widely accepted in most developed countries, although technological developments in this area are continuously striving to make the use of this form of payment more widespread.
Because of these drawbacks, a number of companies have been trying to develop a more robust and secure form of payment system with the help of theblockchain technology. This has been made possible by the progress made in the field of computer science and computer engineering. In fact, the recent years have seen several different breakthroughs in this field, most notably the development of the bitcoin protocol, which has revolutionized the world of online money transfer. Since there is no central body in charge of theblockchain technology, each user would need to get his own fork of the chain, thus ensuring a degree of decentralization.
However, even with the emergence of the bitcoin protocol, the decentralized nature of the currency remains. Given the popularity and practicality of the currency, there are still numerous users who choose to transact in the traditional manner. For these individuals, the option of switching their current currency to bitcoins may seem like a strange choice, but if they consider how much it would save them in the long run – from paying high transaction fees to bear the burden of having to learn new payment system, then switching to theforbitcoffee might be their best option.