Bitcoin- An overview and its features

“The Web as I envisaged it, we have not seen it yet. The future is still so much bigger than the past.” ~ Tim Berners-Lee

A brief on money and technology

Money has obviously become one of the most essential and normal parts of our social and economic lifestyle. To live up to the standards of our society, to buy from essential to luxurious commodities, to invest in better health and future, we are liable to carry out those processes via money. But the current monetary system, i.e. the centralized banking and money generation and validation nodes involves government ruled and formed institutions where it becomes very vulnerable to corruption, sluggishness and inefficiency. We really do wish for an alternative that can make monetary networks move away from those negative points.

From commuting to a far distant place in few hours to printing an essential object in few minutes to sending a video to your beloved ones in a matter of seconds, we have now become more dependent on technology than we ever were. Fulfilling the human deficiencies like the demand for high accuracy jobs, reducing time consumption in outrageously demanding jobs and eliminating the inefficiency in work because of repetitive boring jobs, we also expect the other shortcomings in human behaviors and activities. It is sufficed to say that they are very great at their work as they are assigned to do.

Why should you read it?

With the notable increase of corruption and bureaucracy in administrative and banking circles beside the staggeringly slow processing between the middlemen, we have nowhere to turn to other than technology. In this 1st of 2-part article, I will discuss a revolutionary technology, the power tool for the liberals, that can replace the paper money with digital money and the centralized banking and transaction system with a decentralized, distributed system, Bitcoin and Blockchain which claims to be more secured and claim to have a steady flow structure. In my next article, I will explain how the underlying Blockchain Technology keeps the Bitcoin cryptocurrency so secured, transparent yet opaque and makes it one of the safest ways to transact valuables in its digital version.

Birth of the Cart and Wheels

In 2008, an anonymous individual with an alias Satoshi Nakamoto introduced a white paper called Bitcoin: A Peer-to-Peer Electronic Cash System. The word ‘blockchain’ was never mentioned in the paper. The structure of the mechanism led it to be named ‘blockchain’. In January 2009, Nakamoto released the first Bitcoin software as an open-source project and ‘mined’ the coins in a ‘genesis block’. The paper also pointed out that one could create a more democratic currency free from the control of the government, which can be transferred anonymously and directly to the parties concerned. Bitcoin was expected to ‘generate social and political change by weakening government power’ by many critics. While others believed that Satoshi was primarily concerned with the technological problems of digital currency; ‘the double-spend problem’ and decentralized bookkeeping of transactions. However, Satoshi was able to satisfy both the parties of critics by creating a user-controlled decentralized ledger system that was transparent yet private, immutable and forger-proof. Researchers and critics praised the technology as having the energy to revolutionize and reshape the common aspects of the current society.

A View to the Inside Working

(I will not be going in details of the working of blockchain as I will explain in my next article.)

‘Blockchain Technology is a technology which records transactions made in cryptocurrencies, and distributes transaction details among the users connected to the peer-to-peer network as a decentralized ledger, also known as a block.’

A sender wishing to transact/spend a few Bitcoins with another user which is connected to the network will release a request to the miners (users who process the transaction method) to verify and update the transaction and will distribute the update to all the users connected to the network, thus completing the verification and validating his transaction. Each user keeps a record of all the transactions being performed within the network, a limited number of transaction history are packed together with a special cryptic number in a digital ledger format, known as a block. All these blocks are chained together in chronological order, hence named as a blockchain.

Centralised Vs Decentralised, Distributed Ledger

What’s in the Change?

I’m not declaring that a trust-based, centralised monetary system is the evilest thing out there but handing over the full authority of a system to an organization makes it vulnerable to cruel ideas and practices, becomes a magnet to the powerful individuals lurking around with their solipsistic conspiracies to create an unfortunate heterogeneity in power. Moreover, storing powerful information and valuables in one place is not a good idea in any way.

Using Bitcoins is more beneficial than using paper money and its equivalent.

Bitcoin can be transferred internationally to any corner of the world without consuming time in conversion and granting permission. The hassle of verification to send money to your beloved ones studying abroad, or to buy any exotic thing is considerably reduced, not to forget the reduction in unnecessary bundles of money spent in that process as a transaction fee for the middlemen.
It has the potential to be faster than its equivalent monetary transaction process, as the transaction and verification is mostly automated and free from any human intervention.
Privacy and anonymity is kept high and is a major benefit the users get from preferring cryptocurrencies over paper money.
As it is independent of government organisations, it is free from seizures, bans and demonetization.
The system, being decentralised, is immune from data breaches and system hackings, as the data is spread throughout the network nodes.
The coolest thing about Bitcoin is that it can be programmed to avoid corruption. How? The money intended to be spent on a certain thing can be directed to get accepted only by that specific user or account to which it was specifically programmed.
There are only 21 million Bitcoins that are present and will be generated in total. So, more of the scarcity, more valuable will be the cryptocurrency.

It’s all Roses but with Thorns

Bitcoin, unfortunately, is still not the perfect system for its few shortcomings, which I believe will be resolved as it gets improved over time.

The major headache with bitcoin is that it has a very slow transaction speed. Bitcoin purposefully kept their verification process to take about 10 mins. Moreover, the user needs to wait for at least six blocks to get added to the blockchain for confirming that their transaction was really approved and went to the right location.
Bitcoin gets lost if it is accidentally sent to an invalid location or if the user loses their private key.
The process of verification, i.e., proof of work is very redundant, time-consuming and exhausts a lot of resources which discourages small scale mining.
High end computers are needed for mining computers with an impressive cooling system o(r move to a cold place if you’re serious with mining Bitcoins.)
Its other competitors, like Ethereum, Ripple provide better and efficient services at fewer resource expenses.

A Future to Behold

The future of Bitcoin is very much debatable and is usually subject to an equal amount of likes and dislikes. Harvard University Professor Kenneth Rogoff predicts that the market value of cryptocurrencies could stand to 5-10$ trillion in the next 5-10 years. But Bitcoins redundant and the lagging process might push it behind the competition if they do not bring reforms in it. Overall, the cryptocurrency market is heading towards a progressive future.

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