Crypto Academy Season 3 Beginners' course - Task 3: Bitcoin, Cryptocurrencies, Public chains
What Is Bitcoin and what was the Aim Behind Bitcoin Invention? Is Cryptocurrency Good For A Business To accept As Payment? Why?
What is bitcoin and what was the Aim Behind Bitcoin Invention
Bitcoin is an online digital currency which enables buyers and sellers to transact with each other without the need for a central bank or government issued currencies such as dollars. It is one of the world’s most popular digital currencies, with more than 13 million bitcoins in circulation among more than 100,000 users worldwide. Bitcoin’s popularity comes from its independence from any country or bank, making it free from political manipulation and inflation.
Every time someone buys or sells bitcoins, the swap gets logged. The transaction is safeguarded by sophisticated cryptography. The process keeps track of bitcoins and their ownership. Computers connected to the Internet carry out millions of these transactions daily, which register as lines of code in a central database called Blockchain. Every transaction made with Bitcoin is voluntarily shared with all other computers on the network, making it visible to all users and preventing anyone from spending funds twice. Other digital currencies are often referred to as Altcoins (alternatives to Bitcoin).
Bitcoin was launched in 2009, by an anonymous programmer who published his invention on the internet forum Bitcoin-talk under the pseudonym Satoshi Nakamoto. Aim behind invention of bitcoin is creation of a digital currency based on cryptographic proof instead of trust, where transactions are carried out without requiring an intermediary, intermediaries like banks or government agencies. It was implemented as open source software. It has almost no cash value, but cash cannot be directly transferred to the bitcoin network (because of cryptography). The size of the network of users is known to be large. On 22 November 2017, it was revealed that the number of daily bitcoin transactions surpassed the 100 million mark for the first time. New rules were introduced in May 2018 to prevent a single entity from controlling a majority share in the platform. With a market value now over US$200 billion, bitcoin is currently one of the most valuable cryptocurrencies market capitalization.
Bitcoin is referred to as a decentralized virtual currency because the developers of bitcoin are unknown. The inventor, Satoshi Nakamoto could be an individual or group of people anywhere in the world. It works without any central bank, seizes or freezes your account. Bitcoin transactions are irreversible and immune to fraudulent chargebacks. This makes it reliable for merchants who need to protect themselves against fraud and for countries that prohibit sending anything other than legal tender.
Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and issuing money are carried out collectively by the network. Bitcoin is open source; anyone can access its source code at any time.
Is Cryptocurrency Good For A Business To accept As Payment? Why?
People often say cryptocurrency is good for a business to accept as payment. Whether that's true or not heavily depends on what type of business you're running and how the cryptocurrency was obtained. They say, "More and more businesses are accepting cryptocurrencies as a form of payment. The cryptocurrency market is projected to grow to a total value of $5 trillion within a few years. However, this growth is not without its hurdles. While there are positives to accepting cryptocurrencies as a form of payment, you need to be aware that it comes with its own risks."
Cryptocurrency can be used to pay for goods and services on the internet by buying goods with it or selling goods for it. However, the question still remains what advantages do business owners have by accepting cryptocurrency as a payment? There are certain pros and cons associated with accepting cryptocurrency as a payment method. We'll list some of the obvious advantages and disadvantages below.
Pros of accepting cryptocurrency:
Cryptocurrencies don't rely on a central bank like traditional currency, nor do they rely on a central server to process transactions. Cryptocurrency is decentralized -- there's no single centralized power that regulates it. Cryptocurrency is transparent -- all transactions are recorded on files called "block chains". They're files which verify every transaction that takes place in the digital currency and they're open to anyone who wants to download and study them. People often use cryptocurrency for online purchases because it's relatively anonymous. Cryptocurrency is non-refundable. Once you send it, it's gone. If you're selling goods for cryptocurrency, there's no way to get your money back if the buyer doesn't pay or fails to pay for what they bought.
Cons of accepting cryptocurrency:
As mentioned earlier, cryptocurrency is non-refundable -- once the customer sends that coin or token to you, you can't get it back. Another issue is that many people who buy cryptocurrency are doing so in the hopes that its value will rise. If someone buys 1 bitcoin for $2,000 USD and it rises to $10,000 USD, the owner only has $10,000 USD to spend. They can't take that bitcoin to their nearest grocery store and buy groceries because they only have $10,000 worth of bitcoin -- they need other currencies/goods that can be converted into actual goods or services. This could be an issue if you're selling products for cryptocurrency.
While there are certain advantages of accepting payment in cryptocurrencies for businesses, there are also many risks involved with accepting cryptocurrencies as a form of payment.
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