Shining a Light on Bitcoin

The Bitcoin is a global digital asset used as currency around the world. It is billed as the first cryptocurrency and was released in 2009 by an anonymous programmer, or a group of them, going by the name of Satoshi Nakamoto. Its exchanges are peer-to-peer, and are done without intermediaries like banks or money transfer agencies. Once a transaction is initiated, the transaction is verified by computers linked to its network. These computers are known as nodes. Each transaction is then filed in an online public ledger known as a blockchain.

###Features of Bitcoin

Denominations

The standard unit is the Bitcoin. However, several other denominations exist. It is mainly abbreviated as BTC; though other abbreviations exist.
• The millibitcoin (mBTC); equivalent to 0.001 BTC.
• The microbitcoin (µBTC); equivalent to 0.000001 BTC.
• The Satoshi; named in homage to the creator of bitcoin. It is the smallest unit of BTC. It has a value of 0.00000001, or a hundred millionth.

Storing the Coin Value in your wallet

To be able to enter into buying the bitcoin, you need to be able to keep its value in a wallet. A wallet is a digital program that allows you to keep your bitcoin value and transact with bitcoins on your computer, or to stow away your bitcoins for safe keeping.

Increasing your Bitcoin balance in the wallet

You can either increase your Bitcoin portfolio through mining or through buying it using fiat currency. Buying is usually done through the Bitcoin website or through Bitcoin Exchange platforms. The exchanges are the best bet for many people because the website may not be available in some countries.

Spending your Bitcoin

You can spend your bitcoin directly buying goods and services from businesses that accept it. You can also hold onto it for speculative purposes. You can purchase altcoins using it, or you can convert it back to fiat currency using options from your wallet.

Mining Bitcoin

A computer that keeps records on behalf of any blockchain is said to be doing data mining. Each group of transactions are called a block and are interlinked using cryptographic hashes, between each block and the previous one, hence creating a chain. This is why it is called a blockchain. Because the transaction is transferred to all nodes (i.e. computers that keep a copy of its ledger) immediately it happens, the record is permanent and inalterable, and this is how the blockchain avoids the use of intermediaries and assures security.

Mining complexity keeps increasing with time, and better and better processing power of the nodes is being required to do this. The reward for successfully solving each cryptographic equation to create a new block is 12.5 bitcoin, excluding transaction fees. This reward is halved every four years to finally get to zero when the limit of 21 million bitcoins will have been reached.

Why it may become mainstream in the future

Bitcoin is the standard measure of digital currency. By having so many altcoins that are coming up by the day, it emerges as the enduring reference. And the uses it is being put to also seems to be on the rise.

• As a means of international money transfer; it is easier, cheaper and faster to initiate a payment of Bitcoin from one wallet to another across the world.
• As a store of digital value; all other altcoins are more volatile than Bitcoin. It is therefore obvious that people will want to convert their altcoins to Bitcoins when they are not actively trading coins.
• Awareness about its advantages is increasing worldwide; Everyday, people are getting to understand cryptocurrency and choosing to trade in it. There are very huge untapped markets the world over.
• As a currency of refuge; Venezuela has led the way to run away from an unsustainable fiat currency by embracing the bitcoin. Japan has recognized the bitcoin as a form of currency. Russia is on the way. It is in high demand in China and South Korea. Many first world governments are not far behind.

###The pros and cons of using it as a currency

Advantages:

It is Cheap to transact using bitcoin.

Transaction fees are either non-existent or very low compared to fiat currencies. Merchants are not able to charge fees without disclosing to the customer.

It is Fast.

Sending money from one wallet to another can be as fast as the click of a button.

It is Transparent and Straightforward.

There are no governments or banks governing how bitcoin is used, and it is the same coin worldwide, so it is borderless. Anyone can verify any transaction on the blockchain at any time.

It is Secure.
Payments are done using codes, therefore the risk of sharing personal information is minimized.

Disadvantages:

• It is very volatile; the fact that there is no government regulation and that it is solely dependent on demand and supply can make the bitcoin, like all other cryptocoins, quite volatile. In fact, recently it crashed from a high of close to $ 5,000 to almost $4,000 in three days due to an ICO ban from China. This is simply because when bad news happens, new and eager buyers hold the coin at bay to see what will happen, and holders dump the coin on the cheap in panic.

• Understanding the technology is challenging; The complete scalability of the technology will only be possible when even the dumbest can embrace it. Which is a challenge because the technology is complex. The awareness has also not become mainstream.

• It’s still in its infancy; as much as it is the oldest cryptocurrency, it is still new in development and several features are still being improved by the day.

• It has been used for ransom ware and as a drug currency; as dubious as this is, people who hold others ransom in the digital world, especially using encryption to lock computers, are asking for bitcoin as ransom. This has the effect of popularizing the coin for the wrong reasons. Also, due to its security, it is fast becoming a currency of choice for drug dealers.

• Other Blockchains are exhibiting greater versatility in usage; Platforms like Ethereum have emerged with greater ability in areas like the smart contracts and the ability to allow future integration with front-end functionalities for all manner of applications in the blockchain industry. It is no longer just about buying and selling coins or transfer of money. The ether, the coin used by Ethereum, looks set to break the market capitalization ceiling long held by Bitcoin, and currently standing at $72 Billion.

###Exciting opportunities

The bitcoin is fast becoming one of the reasons why we can say we are living in exciting times. It has brought with it the altcoin boom, and each altcoin has come with increased and improved uses. There is blockchain beyond currency! And going by the acceptability that is happening around the world, it would pay to delve more into understanding the world of cryptocurrency.

About the Author: While not in the blogosphere, Johnson is a food scientist, nature lover, traveler, Crypto Enthusiast and farmer.