What is the Bitcoin Based on?

Fiat currency has always been based on and backed up by silver or gold. In theory, you would know that you could get gold from the bank by handing over dollars, or Euros or whatever currency you use (although this doesn’t work in practice). Bitcoin does not have this basis. Instead, it is based on mathematics.

Across the globe, millions of computers are using software that follows a distinct mathematical formula to mine the Bitcoin. This formula is open to all to see so anyone can check on it if they wish to. The software itself is also open to all and that too means anyone can look and see what it is meant to do
Bitcoin has several distinct features that set it apart from the fiat currencies:

1. Decentralization – I know I have said it before and you will see it again but this is the whole point of the blockchain and Bitcoin. Remember back in 2013, when the Central European Bank got involved in Cyprus and took people’s money away from them, causing an almost total meltdown? That can’t happen with Bitcoin because there is no bank or agency that can do that

2. Easy setup - when you go to open a bank account, there is any number of hoops that the banks make you jump through before you can. Merchant accounts are so difficult to set up because of all the red tape and bureaucracy. Bitcoin can be set up in seconds, you don’t need to answer reams of questions and prove who your great granny’s best friend was and you don’t have to fork over any hard-earned cash in fees either.

3. Anonymity. Bitcoin is pretty anonymous; you can have as many Bitcoin addresses as you want and none of them are linked to your name, your address, or any other information that can identify you personally. However…

4. Transparency. All details of every Bitcoin transaction that ever happens is stored in the blockchain, which is open for all to see. Anyone can look at your public Bitcoin address and see how many Bitcoins are stored on it. What they won’t know is who owns that address and those Bitcoins. There are some things that you can do to muddy your activities on the network, such as using different Bitcoin addresses for each transaction and not making transfers of large amounts of Bitcoin to one address.

5. Small fees. While your bank may charge you several pounds or dollars for an international transfer, Bitcoin doesn’t

6. It is fast. Money can be sent anywhere in minutes, within 10 minutes at the most once the network has processed and verified the transaction.

**7. It is non-repudiable.

**Once a transaction has been done and the Bitcoins sent, you can’t get them back unless they are returned by the recipient.

In theory, Bitcoin has tons going for it, and practice is also shoring that up. With the price on the rise and set to go even further there has never been a better time to get involved with the Bitcoin gravy train. And so, for the next chapter, we are going to look at Bitcoin mining.