Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.- bitcoin.org
Value of bitcoins ...Bitcoin is a cryptocurrency and a digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009.The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. Since the system works without a central repository or single administrator, bitcoin is called the first decentralized digital currency.Besides being created as a reward for mining, bitcoin can be exchanged for other currencies, products, and services in legal or black markets.As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin. - wikipedia.com
What are the advantages of Cryptocurrencies ?
1. Limited nos of currency in circulation, issue of fake currency is totally removed with encryption and distributed database
2. Difficult to duplicate as it each transaction needs confirmation/authentication from a digital database - the blockchain
3. Just like shares, a cryptocurrency value can fluctuate as more people start using it and can be reliable form of currency
4. The volume of crytocurrencies in use also increase at a predetermined rate in such a way that the value does not skyrocket at any point of time and holds it within reasonable limits. Bitcoins which were issues at $.05 in 2008 are now valued at more than $2420 as of 24 May 2017.
5. It is a global currency, no central bank controls it. The distributed database (blockchain) of the coins and the great secrecy with which it is encrypted makes the database difficult to breach or hack.
6. It gives customers freedom to store their wealth in national currencies or digital currencies
7. As digital currencies escape national government regulations, it is a definite pointer to a unified global currency and unified global markets.
8. The extensive range of use and applications of the block chain concept and encrypted digital currencies can ensure stability in global financial markets in future.
9. More popular an encrypted digital currency, more will be its usage and more value will come out of it.
10. The innovative uses of cryptocurrencies and blockchain is limitless, it could even change the way we do business in future cutting across national boundaries.
1. The transaction cost is now at $6 per transaction which could demotivate large transactional volume
2. Transaction times can be anywhere from 2-3 hours as databases on blockchain around the world have to be referred before finalising any transaction.
3. Big IT firms can have hold and control of future cryptocurrencies and they could attempt to throttle free enterprise and monopolise global economic transactions
4. Can it be used in the wrong way like for example to finance extortions or drug money transactions ?