Didn’t know that Bitcoin existed for almost 10 years…

Finance, technology, digital network, is constantly evolving and is continuously making human-interventions faster, convenient, and effective. However, this offline-online interaction required fees for operation, time, approval and limited source. In October 2008, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was released. This paper detailed a form of currency network that enables a new payment system with a complete new source of digital money. It is a new form of money that is created and held digitally in the decentralized peer-to-peer payment network that is powered by its users with no centralized authority.

So what is Bitcoin?

Bitcoin is the first decentralized digital currency, that has no government, institution or any other authority to control, and the operation works through user to user on the peer-to-peer bitcoin network directly. As so, Bitcoin is the first-mentioned virtual asset that uses cryptography for secure financial transaction and transfer in Peer-to-Peer network. The transactions (transfer, deposit) are verified by network of nodes through cryptography and recorded in a public distributed ledge called a blockchain.

Than what is Blockchain?

The bank holds a private record of each personal information and transaction made throughout the system, and only the bank itself can verify or refuse. The bank does not share or post the data to corresponding enterprise; however, it can be altered through authorization of the bank. The system may seem secure and trustworthy, from the record and awareness. However, it has high-payment fees, slow in progress, and classification. In addition, the bank can be attacked offline or online to scam or fabricate data information and also the authorizer can be in disguised. Unlike this centralized system, where one control a whole system, Blockchain offers a total distinctive system of distribution.

The Blockchain protocol is basically decentralized, which means that the data is transparent and accessible to other individuals. In order to verify, interconnected sources have to make a simultaneously agreement with another to proceed. Although the verification is misplaced, the database still remains accessible. Therefore, data cannot be altered or scammed through a certain authorization.

So, how does Blockchain work?

So, how does blockchain actually function? The format of Blockchain is a construct of continuously storing list of data and information, called “blocks,” which are distributed and secured using cryptography[1]. Each block contains numerous amount of valid and invalid transactions that are hashed and encrypted. For a transaction to be “stacked” into a block to form into a blockchain, the system requires two distinct sources; issuers [node], and miners [validate transactions].

Nodes are any computing P2P system that are connected to the Bitcoin network. Each functioning node is a record-keeping service done through the use of computer processing power, which has the complete copy of the whole blockchain ledger, and is regularly updated every 10 minutes. When a node receives a transaction, it must verify the transaction through decrypting the hash code that is valid in each transaction differently. This process is called mining. Each mining costs a certain fee, which is rewarded to the miners with a certain amount of Bitcoin, as verification is completed. As each transaction is verified, the transaction is once again stacked into the block. As each transaction stacks up, it forms a whole set of chain network of blocks.

How do you make transactions with Bitcoin?

Making a transaction requires having access to the public and private keys associated to the amount of bitcoin in Bitcoin wallets. Public key, also called an address (encrypted), are a formation of random letters and numbers called “hash code.” This encrypted code is distributed to nodes when you want to make a transaction. The private key is another sequence of letters and numbers. However, private keys are kept secret to user itself. Private key must not be shared to anyone and any wrong transaction cannot be reversed, with complete responsibility to itself.

What’s so good about it?

Lower transaction fees

Any transaction involves light or heavy fees depending on the amount, from involvement with government agencies and financial institutions. However, Bitcoin transaction require only the same minimal amount of fees whether the amount major or minor.

No tax

In addition to lower fees, users are not charged with additional tax payment, because the users are not identified, trace, or recorded.

Security and control (independent)

Users are in full control of their transactions and transfer, and any extra cost cannot be made without being noticed.

Irreversible

Unlike the “chargeback” system of credit card payments or even bank payments, Bitcoin transactions cannot be reversed. Bitcoin is the only payment system that is 100% irreversible and cannot be chargedback. Therefore, the user must be aware of this irreversible system in hand when transactions is made, because the system cannot take any responsibility for it.

Transparent and neutral

In the blockchain system, all the processed transactions are available for everyone to see, however personal identity is kept hidden. Only from public address is visible, and it cannot be altered or reformed by any person, organization or government because the information is cryptographed and is constantly transparent.