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What is bitcoin in simple words?

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Bitcoin – it is digital money. Physically, this currency does not exist, there are only special electronic registers in which it is accounted, how many users have bitcoins and who and where transfers them. These magazines are called blockchains. Bitcoin is also called a crypto-currency or an electronic payment system like Visa and MasterCard.

HOW DOES BITCOIN LOOK?

The bitcoin crypto-currency itself is stored in a wallet, which everyone can install on his/her computer. Bitcoin-address is a set of Latin letters and numbers of 34 characters in length. It can also be represented as a QR code.

BITCOIN AND GOLD

Many people call bitcoin an electronic analogue of gold, because crypto-currency, like precious metal, exists in a limited number established by the author. With time, bitcoin is getting more difficult to get, more and more computing power is required. Perhaps this is the only similarity.

DIFFERENCE FROM THE USUAL CURRENCY

Bitcoins differ from the usual currency in that registers are not stored centrally in banks and payment systems, but simultaneously on all computers whose hosts have installed special software. Anyone can see all transaction with all bitcoins during the whole history.

SIMILARITY TO BITCOIN

At the moment, many types of crypto-currencies (more than 1000) exist, they are also called altcoins. Periodically some appear and others do not stand competition and disappear from the market, but bitcoin was a pioneer and earned trust.

ADVANTAGES:

  • your bitcoin account cannot be blocked, unlike accounts in other payment systems and banks;
  • you can use this account anywhere you like;
  • anonymity and transparency of transactions – all transactions are visible in a public log, but the names of users are not disclosed;
  • your account is not bound to your personal data.

DISADVANTAGES:

  • risk of losing money when exchanging bitcoins, because the activities of exchange platforms are not regulated;
  • the price of bitcoin can change significantly or even disappear, since it is not bound to any official state currency;
  • consumers who use bitcoin for payments for goods and services are not protected with the EU regulations that provide a refund if they are discharged as a result of an unauthorized transaction;
  • bitcoins stolen from a digital wallet are almost impossible to return;
  • lost codes from the wallet cannot be recovered.

THE BASIC ADVANTAGE:

Developers of bitcoin managed to come up with a system where it is possible to avoid problems with intermediaries, such as a bank or payment system, who charge a fee for their services. This is achieved by technology, where each user can directly transfer money to another user.
Is it possible to counterfeit bitcoin?
Bitcoin registries are protected by cryptography. It is impossible to counterfeit them at all at the same. It is impossible to rewrite data in blocks and state that someone now has millions. Bitcoin in this sense is quite protected. The truth is there is already an attack that allows you to pay off twice with the same bitcoins, so it’s impossible to say that bitcoin is absolutely safe.

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