Bitcoin (BTC) is the first digital currency to be used and dispersed automatically. No organization or individual controls issuance, costs, or bookings. The production of each bitcoin is maintained digitally and runs under an emission control policy of only 21 million units.
For its operation and management, the Bitcoin Network is based on a “peer to peer” or user-to-user system that makes it possible to dispense with intermediaries such as Banks or online payment entities such as PayPal to make our payments.
How does Bitcoin work?
By way of visualization, users only see the amount in Bitcoin they have in their wallet and the results of the different transactions they have made with the currency.
However, behind the scenes, a public book called “blockchain” is being shared on the Bitcoin network and is operational 24 hours a day, 7 days a week. This book contains every transaction processed between users on the network.
In addition, to make such a change in the Bitcoin network, it would be necessary to have more computing power than all the power connected within the network. Neither Google nor Facebook have such computing power in the world.
However, thanks to the development of Lightning Network technology, transactions with Bitcoins can be done in much less time. This tool allows us to create Payment Channels outside the Bitcoin Blockchain network in order to execute faster transactions and without having to go through the cumbersome verification process. Bitcoins contain the public address of their owner. This address does not contain any personal data of the user, so all transactions are anonymous and a private key is used later to authorize payment.
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One of the main goals in creating Bitcoin was the independence of the network from any government authority. It is designed so that any person, company, through the computation that they use in the mining process and the verification of transactions, is part of a huge network.
The digitized system governed by Google and Facebook is managing to track all our actions with just a couple of clicks. Everything is very different if we use Bitcoin, since the wallet that we have to store and spend our coins is not linked to any type of personal information.
Bitcoin’s secrecy is relative, as every BTC deal that has happened is stored on the Blockchain.
As mentioned earlier, transactions within the Bitcoin Blockchain network are kept within a Public Book that is recorded on the Blockchain and is visible to everyone. This implies that all operations within the network are visible but what cannot be traced is the particular property of each Bitcoin that people have within the network.
Operations within the Bitcoin Blockchain network are intended to be resolved in a matter of minutes, regardless of the location of the participating parties to the operation. Compared to national and international banking services, Bitcoin has a considerable advantage from the point of view of the speed of execution of transactions.
Once a transaction is made within the Bitcoin Blockchain, there is no way to reverse it. This feature can be a double-edged sword that we must use with great care. On the one hand, it is positive since we can be sure that every Bitcoin we receive cannot be returned to the person who sent it to us. But we must understand that this feature can also harm us when we send our Bitcoin to another address. . It is recommended to verify that everything is correct before carrying out any type of operation.
Virtual currencies lower costs by eliminating intermediaries entirely.
Today it is still very common that sending money to any part of the world carries significant fees or commissions due to the large number of intermediaries in the process. This includes: Bank transfer fees, fees for accepting or using credit or debit cards, fees for using “money transfer” services or fees for using “online payment” services.
In Bitcoin there are no intermediaries and the money passes directly from person to person: from buyer to seller or from individual to individual. This reduces the price of sending money substantially and also allows you to sell products and services at a fairer price.