Other than marmite, very few things divide opinion across the globe as
Bitcoin does. That’s mainly because only a small percentage of the
population truly understands what it is. Some view it as an item that
can only be utilized by the tech-savvy, while others believe it’s used for
the wrong purposes. But, in fact, Bitcoin is just a virtual currency that
creates anonymity.

It removes the need to use a bank to store money, it removes the need
to attach your name to transactions, and it removes some of the risks
of becoming a victim of fraudulent activity. More and more people are
beginning to realize the advantages of this digital currency, and the
increased popularity is correlated with the soaring prices amongst all
of the digital exchanges.

Bitcoin is an entirely decentralized payment network, meaning it’s only
maintained through a peer-to-peer network. Moreover, its currency –
bitcoin – is just a set of numbers and letters which are stored on the
Blockchain technology. This means it doesn’t actually represent as a
conventional currency. Although, the fact that millions of people still
purchase things with it, shows that it could become an everyday form
of money in the future.

If we use a more common example, it’s like PayPal enabling you to
send and receive money, and then allowing you to withdraw your
balance in a widespread currency such as the US dollar. However,
Bitcoin is unique and doesn’t operate in that way whatsoever. As it’s a
decentralized network, there’s no official method to determine what
value the bitcoin currency possesses.

Therefore, it tends to mirror that of the conventional currencies and is
influenced by the number of people who want it and the amount that
is available—otherwise known as supply and demand. But, another
difference is that it doesn’t give you the chance to withdraw it for use
in the real world. Why? Because in reality, it’s not actually a genuine
form of money, it’s software.

Bitcoin is just a line that has been recorded in the Blockchain ledger,
and a set of digital keys stored in an offline or online wallet. So, while
it’s advantageous to make payments online due to its strong security
measures and anonymity, the disadvantage is not being able to transfer
that into physical cash.

To put all of that into layman’s terms – the bitcoin currency is a digital
replica of money, which keeps your identity hidden and allows you to
make transactions on the web.

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Author: lustigenarren