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Bitcoin - Digital Gold Shapes the Future Economy

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bitcoin-digital-gold-shapes-the-future-economy

What is Bitcoin?

Bitcoin is a cryptocurrency, invented by Satoshi Nakamoto in the form of open source software since 2009. Bitcoin can be exchanged directly using an Internet-connected device without going through a central financial institution. which time.

Bitcoin works differently from typical currencies: There is no central bank to manage it, and the system is based on a peer-to-peer network protocol on the Internet. Bitcoin supply is automatic, limited, distributed on a predetermined schedule based on algorithms. Bitcoins are issued to computers that "mine" Bitcoin to pay for verifying Bitcoin transactions and writing them into a distributed ledger in a peer-to-peer network - known as the blockchain. This ledger uses Bitcoin as the unit of account. Each bitcoin can be broken down to 100 million smaller units called satoshi. (source: wiki)

bitcoin-digital-gold-shapes-the-future-economy

Transaction fees may apply to new transactions depending on network resources. In addition to transaction fees, miners are also paid for creating blocks that contain transaction logs. Every 10 minutes, a new block is created with an allocated amount of Bitcoin. The number of bitcoins allocated per block depends on the uptime of the network. In July 2016, 12.5 bitcoins were allocated for each new block. The inflation rate will halve to 6.25 bitcoins by July 2020 and continue to halve every 4 years until a total of 21 million Bitcoins are released in 2140. In addition to Bitcoin mining, users can obtain Bitcoins by exchanging them for Bitcoins when selling other currency, goods, or services.

Bitcoin is the most typical, firstborn, and most widely used cryptocurrency in e-commerce. Businesses tend to want to pay with Bitcoin to minimize costs. Large fluctuations in the value of each bitcoin have prompted criticism of Bitcoin's economic suitability as a currency.

bitcoin-digital-gold-shapes-the-future-economy

To make it easier to visualize, we have an example like this about Bitcoin:

Imagine you and I are sitting in a park. I have an apple, and I give it to you. So you have an apple, and I don't have any. I can no longer control that apple, and you have full control over it. We also don't need a 3rd person there to help us with the transaction. We don't have to bring Uncle Tommy over just to sit with us and confirm the apple has passed from my hand to yours. That's how in-person transactions happen.

And now let's turn that apple into a digital apple. I still give you my apple, but it will take a few more steps.

How do I know this digital apple used to be mine and is now yours, and I can't interfere. How do I know I didn't send this apple to Lisa or Joe as an attachment in a previous email. Maybe I copied it into thousands of apples before I sent it to you or I even posted it on the internet and millions of people could download it.

So we need a ledger to record all the behavior of the digital apple. That's why blockchain was born with digital apples as bitcoin. And miners are the ones who operate this ledger.

bitcoin-digital-gold-shapes-the-future-economy

Advantages of Bitcoin

As assessed by leading experts, the birth of bitcoin marked a historic turning point in the form of electronic payment, bitcoin has enormous advantages and is superior to other currencies:

Convenience in transactions: If with banks or online payment services (intermediaries) there will usually be a limit on transferring and receiving money in a day and time, but with bitcoin, it is completely absent. You can send as much as you want, anywhere in the world at any time to your family and friends without anyone managing the amount you send.

Bitcoin cannot be faked: Another advantage of bitcoin is that it cannot be faked, because bitcoin does not exist in a physical form like other currencies, moreover, testing bitcoin does not cost anything while gold is very high.

High security and very safe: All bitcoin transaction information is displayed on the internet, but the identity of the trader does not appear, so the security of information is very high. Up to now, the bitcoin protocol does not have a security hole to lose users' bitcoins.

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Extremely low transaction costs: Since there is no middleman to manage bitcoin transactions, cost = 0, you only have to pay transaction processing fees on the systems but it is very low.

Environmental protection: Bitcoin currency does not have to use printing or mining chemicals to create it, so it is very safe for the environment. The computer system that processes bitcoin transactions consumes much less power than the current financial system.

E-commerce development potential: Currently, there are many businesses, companies, and stores that allow the use of bitcoin to pay bills, all bitcoin transactions cannot be refunded or reversed, so all Fraud is useless with bitcoin.

bitcoin-digital-gold-shapes-the-future-economy

Disadvantages of Bitcoin

The number of users is not much: Bitcoin is mainly used in developed countries such as the US, China, .. and in undeveloped countries, the use of paper money and gold is too familiar. And the majority of people are not knowledgeable about cryptocurrencies, some groups of people who do not have enough knowledge, do not know what bitcoin is, think that bitcoin is an unreliable virtual currency, so they are still shy, and worried afraid to use bitcoin money.

It is not easy to use bitcoin: Without knowledge of technology and really learning about bitcoin, it is difficult to use and trade it, as described above to use bitcoin you need to create a wallet bitcoins, and exchange bitcoins for cash. Therefore, those who do not know anything about information technology, need someone with experience to guide them to do these jobs. (source blogtienao.com)

Bitcoin price fluctuates: Just like the dollar, euro, gold, or stock market bitcoin also fluctuates in real-time, sometimes rising sharply, sometimes falling sharply, most of the fluctuations in the world have an effect on the currency. Cryptocurrencies can make the price of bitcoin fluctuate. For example, at the time of the release of bitcoin, the price of Bitcoin was only a few dollars, but at the present time, the price of 1 bitcoin has reached more than $60000.

Hackers, criminals launder money: Because of the unregulated form of bitcoin transactions, many groups of criminals use this currency as a transaction method. Hackers can also find and attack many bitcoin exchanges and steal, money laundering can happen at any time.

bitcoin-digital-gold-shapes-the-future-economy

How to earn bitcoin

Mine yourself or join bitcoin mining groups

You need to understand that mining bitcoin is an emulation process of "miners" to solve a problem and find the answer to that problem. On average, every 10 minutes, there will be one or a group of people who solve this problem and receive the corresponding amount of bitcoins. A few years ago, there were quite a few individuals and groups of bitcoin mining, but because the investment in mining machines and electricity was too large, it could not be maintained anymore.

So you can find such bitcoin mining groups or friends who are all miners, you can invest money to join, you can also spend money to buy miners, but this form of return capital takes a lot of time and effort.

Spend money to buy bitcoins

"How to invest in bitcoin?", this depends on each person's thoughts and opinions, investing in bitcoin is like buying gold, playing stock, if you feel the potential, you can use personal money to invest in buying bitcoin, you can buy from friends (if any) or go to reputable bitcoin trading sites.

bitcoin-digital-gold-shapes-the-future-economy

Conclusion: Acting as a digital currency, the technology of the future, Bitcoin is increasingly showing its heat on the playing fields of countries with strong economies, but high technology also goes hand in hand with high risk. But the higher the risk, the higher the chance.

© 2021 Dao Vu Thien Nghia

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