Bitcoin is A decentralized payment system
The special feature of Bitcoin is that the money from a Central location administered by or issued is: Each User has a private account in a huge Peer-to-Peer network, each Bitcoin unit is by a string of digits and characters on the Computer of the owner is stored. The network is also stored, in whose possession the unit is located, and by what hands it has already passed. The path of each coin is visible to everyone, making counterfeit money is excluded.
Bitcoin as a chart (graphics: bitcoin.org)
How are Bitcoins?
Since there is no Central Bank or similar, the bitcoin outputs have to be created, the virtual coins are different. And that can, in principle, make everyone just a Computer and lots of time are needed. Bitcoins can namely be calculated, which is a commercially available Computer, however, is very useful: The computational cost is so high that the cost of electricity is usually higher than the profit in the Bitcoins. Generated coins will be immediately added to the distributed network, so that no one else can find it more by chance that the same coin again (he).
Advantages of Bitcoins
The structure of the Bitcoin system brings a lot of benefits - these are the biggest:
- worldwide toll-free Transfers
- complete anonymity or Pseudonymity of subscribers (each user is identified by a string)
- no censorship or blocking of the plants possible
- Opportunity to win through speculation (about exchange rates on Online market places)
- no Inflation, since the total number of Bitcoins is limited to 21 million, so a similar scarcity as is the case with precious metals
The risk of the Bitcoin: the currency exchange rate
Unlike other established currencies, the value of Bitcoin is very volatile.
- Particularly in the course of the Cyprus crisis in the beginning of 2013 surged, the value of the Online currency within a short time of 3 to 5 dollars to about 266 dollars high, the bubble burst and the price dropped to under $ 80.
- The speculation in Bitcoins is extremely risky to major exchange platforms such as bitcoin.de or Mt. Gox is the history of the course.
Price fluctuations for Bitcoins.
The idea behind Bitcoin is to develop a payment system from a decentralized Peer-to-Peer network is without a doubt very interesting. It is questionable, however, whether it will keep the Ecosystem in the future.
