Bitcoin, abbreviated as BTC, is considered a type of digital currency or virtual money. As its name suggests, this currency is known as the queen of currencies and is the most important and valuable among them. The emergence of this virtual currency and the processes of mining and related transactions have created a fundamental transformation in the global monetary system and achieved an extraordinary position with unprecedented popularity.
What is Bitcoin?
Among the vast digital currencies that constitute one of the broadest financial markets, the title of queen has been assigned to one of them, BTC, which can be identified among other currencies by the symbol ₿ or ฿. This virtual currency operates in a system that is free from any central control and oversight by any individual, group, or third party. Indeed, the shortest answer to the question of what Bitcoin is, is this few-word explanation from its creator, Satoshi Nakamoto: “A peer-to-peer electronic money system.”
Characteristics of Bitcoin
The definition provided by Nakamoto considers characteristics for Bitcoin, which are as follows:
- Introduced as a type of money
Thus, it can be deposited or withdrawn like any other unit of money in the world and can be used to make purchases since it has financial value.
- It is electronic
Therefore, it cannot be expected to have a physical form and appearance, and it is only possible to work with this monetary unit in digital form. With this explanation, BTC operates solely on the internet.
It works peer-to-peer
With this characteristic, it follows no supervision or control from any force or authority; rather, only the two sides of the transaction are involved, who take on the roles of owner, bank, and observer, and perform the desired transaction directly and equally.
How Does Bitcoin Work?
For BTC to function correctly and appropriately, it operates within a global and complex network called “blockchain.”
Understanding Blockchain
Blockchain is an extensive and complex network that encompasses a vast array of computers and servers around the world and is based on the use of decentralized technologies and precise cryptography. This network is referred to as a ledger that facilitates the recording and preservation of transactions performed by Bitcoins.
Anything recorded in the blockchain is irreversible, non-duplicable, unchangeable, and voidable, and remains completely transparent and visible to all users; therefore, there is no concern for any type of internet fraud for it, and so far, no pathway for disruptors to access this platform has been formed.
The most significant and largest impact that Blockchain has had on the cryptocurrency market was the possibility of eliminating central banks and financial institutions from the world of financial transactions and digital assets, which created a very high level of security for these assets and called many traders from around the world to this financial market.
Read More: Satoshi Nakamoto: Unveiling the Enigmatic Creator of Bitcoin
Capabilities and Benefits of Bitcoin
We previously mentioned several general features of BTC; now we will explain each of these capabilities of this digital queen in more detail:
Decentralized
The first and most prominent feature of this popular currency is its capability of decentralized operation and financial unit. The scope of Bitcoin’s operation should be considered worldwide with no geographical or temporal limitations, providing transaction conditions for everyone from any point in the world without the need for any source for confirmation and supervision, in a public space that is not accessible by country borders and creates no barriers.
This currency obeys the policy of no sovereignty! Everyone can see all the events and transactions that have occurred. A space for anyone from anywhere without the management of a third party.
Easy Transfer via the Internet Without Physical Presence and the Need for Transportation
In the not-so-distant past, people had to carry bundles of cash in bags or even larger sacks when the amount was substantial. They held these with thousands of anxieties and concerns, walking through streets and sometimes cities, using public transportation to deliver the money to its destination—a process that, if successful, brought great relief and peace of mind! This was until digital and internet processes came into play, introducing a simple and hassle-free method.
Among digital currencies, with Bitcoin at the forefront, transfer from one point to another rides the digital waves of blockchain, navigating the intricacies of the internet with a phrase that has a complex and unique encryption, securing the transaction and receiving a confirmation of success from the global network. The only necessary action is the preservation and maintenance of the private encryption key that is created for an individual’s wallet, which identifies the holder of the digital currencies.
Non-Replicable and Fraud-Proof
Since Satoshi Nakamoto designed and introduced the blockchain network, the possibility of copying, reversing, and forging digital currency transactions has been eliminated; this is due to a complex system of cryptography. Transfers in this network are done by a vast network of computers and servers which, unlike humans, cannot express a desire to cancel or reverse a transaction!
Supply Limitation
Programmers and designers of BTC have defined and shaped its structure such that only up to 21 million units can be issued, and no new Bitcoins will be produced after reaching this amount. This decision was made based on experiences from the monetary systems of banks worldwide. Countries and governments contributed to the depreciation of their currency by issuing more money, leading to inflation. To prevent such a scenario, limitations have been set for the issuance of this currency.
Anonymity of Transaction Parties
While all transactions made in blockchain are recorded and can be traced back to the first transaction, it is not possible to access the information of the senders and receivers or identify the transferred amount. The only recorded address of individuals is the encrypted wallet address, which did not need to be registered in the ledger.
These unique features and the global uniform value of this currency are a major temptation for traders who can buy and sell BTC at any time of day or night on the internet, without any need for confirmation from the central bank of a country or any supervisory system.
Conclusion
Among the various digital currencies, Bitcoin is recognized as the queen of currencies, valued very highly. BTC, as a type of money or digital currency operating on the global blockchain network, possesses notable features including: being decentralized, fraud-proof, irreversible, unidentifiable, not needing physical transportation, and having a limited supply.
Also Read: Bitcoin Mining: Unveiling the Digital Gold Rush
By David Taha