Bitcoin: A renaissance in Finance and Money

Well, well, well word bitcoin is the most spoken word especially in stock marketing since 29 November, 2017 when news hits that Bitcoin surges through $11,000 in less than 24 hours.  Many times readers have come across the word cryptocurrency  while reading the context of bitcoin. What is cryptocurrency? Let me explain you in plain english so that it may enters your head with ease. Cryptocurrency can be stated as beginning of secure digital transaction. I am not wrong if i say that it is the money of future. It is a digital medium of exchange which involves the process of cryptography to secure its transaction and creation of new coins. It is different from normal currencies like USD whose value is controlled by government whereas cryptocurrencies are fully decentralized and government has no control on it. Let me move straightforward towards the topic of this article and justify why bitcoin would be the future of money or a renaissance in finance. Bitcoin uses block chain as its building block and security of blockchain is its describing feature. Hackers have to solve complex computational problems and have to alter every single block and links in the chain and almost approximately half of the computers involved in mining the block chain. This is nearly impossible. This level of security in the transaction makes bitcoin future of money and renaissance in finance. Though there may be many gimmicks or drawbacks or loop holes in this digital currency but this has provided a new way of life and enhances a new level of security.

Now let us see the key difference between other currencies and bitcoin. If I am taking about USD or euro or other major currencies of the world these are referred as Fiat currency whose value is backed by the government whereas bitcoins are created by the decentralized process called mining. Mining is done by skilled persons called bitcoin miners and special hardware is used for securing the network. One key feature in creation of new bit coins lies in its creation at fixed rate. These rates have been defined by Satoshi Nakamoto, the creator of bitcoin in his paper Bitcoin: A Peer-to-Peer Electronic Cash System published in 2008. As process involved in creating is mining hence it is often compared with gold which shares the same process. Bitcoin uses  Blockchain (public ledger of all transaction) to add records of a new transaction and are added in blocks roughly every 10 minutes. Ledger plays a very important role and is needed by every node to confirm the validity of transaction. Bit coin miner which are expertise in mathematics solves complex mathematical  problem using appropriate software  and succeeds in creating a new block and received certain amount of bitcoin as reward. Roughly speaking after every four years, block reward is halved. In plain English approach is miners uses their hardware to verify  valid transaction, put them in blocks, solve the mathematical problem  during the process called hashing and getting new blocks added to the blockchain.

Bitcon

Following reason explain why bitcoin beat dollar or any other relevant currency:

  1. No intermediate between sender and receiver needed: Bitcoin is a decentralised type of currency and hence banks have no control over it. some relief from banking system is achieved.
  2. Bitcoin is rebuilding free marketers capitalism or democracy in financial system : Bitcoin is trying to free market and invention. This will lead to increased economy.
  3. Bitcoin appreciation versus dollar inflation: Inflation means when more money is circulated in the market and hence price of money is decreased. but when bitcoin is referred it has a set amount of bitcoins in the circulation (12.5 new bitcoins are added into circulation in every 10 minutes). When more people enter in the market price of bitcoin increases. Statistics says that value of bitcoin has increased 50% in 2016, whereas price has risen to 35% in 2015.
  4. Bitcoin enhances more security than dollar’s security: Bitcoin has no single point of failure, network is more secure. Bitcoin unlike the fiat money is consumer driven. Bitcoin uses SHA-256 encryption for both its proof-of-work (POW) system and transaction verification security of bitcoin lies in transaction blockchain. Bitcoin wallet can be stored offline and hence eliminating the risk of being bitcoin wallet stolen.

Disadvantages of Bitcoin:

  1. Bitcoin are not wisely accepted: Bitcoin are only accepted by a few online merchants. So whole world cannot rely on this currency.
  2. Corruption of wallet: Since wallet can be stored offline, it has chance to be corrupted by virus or hard disk can crash.
  3. No Physical form: It can not be directly used in stores and needs to be converted in another form.
  4. Decentralised Nature: This nature is both curve and blessing. As it has no central authority governing it. No one can guarantee its minimum valuation.

Future Scope of Bitcoin:

Bitcoin does not have physical form, hence needs to be converted to another form to use in stores and many other places.This issue needs to be addressed. Further, bitcoin is not widely accepted system as it is a new concept and people has less believe in it till now but as every coin has two sides let us see optimistic point with regard to bitcoin. It is a open system and anyone in the world can access to it. If you look at the banking system around the world, many people do not have access to banking system and hence it will be boon for such people. Another feature which makes it effective and trending is its decentralized nature which makes it more transparent. Considering all the points, it will be not false to say that bitcoin would be future of the money. But still it takes time and trust of people on it will be needed.

 

15 thoughts on “Bitcoin: A renaissance in Finance and Money

  • January 30, 2018 at 12:18 am
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    I love this article. Content is very good and gained some good knowledge about bitcoin. I request you please explain what is block chain.

    Reply
    • January 30, 2018 at 12:26 am
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      First of all, Glbaat would thank you for spending your time in reading this article. This is a new and trending topic so some key words are not easy to interpret. But We will try our best to resolve all of your problems.

      Block chain contains blocks also named as records which are secured using the concept of cryptography. It can also be termed as incorruptible and transparent public ledger which also means that whole data is public and huge amount of energy and computational power is need to alter content of the block chain so very hard to corrupt and hack it.

      Reply
  • January 30, 2018 at 12:35 am
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    I have read the article and found the topic very useful. Bitcoin future money is really interesting and let us see whether it would be accepted worldwide or not. But anyways author of this article writes article by mentioning both negative and positive ways and this has impresses me a lot.

    Reply
    • January 30, 2018 at 12:39 am
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      Yes, you are right. Cryptography is the essential feature and decentralized is another important feature which makes it different from fiat money and who knows what would happen in future. But thanks again in spending time to read the article and provided your valuable points as the feedback. Authors are always encouraged if they are provided any feedback. Thanks a lot again for such work of reading and asking questions.

      Reply
  • January 30, 2018 at 12:50 am
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    I read the article and found the basic concepts regarding bitcoin very clear. I appreciate glbaat on writing such quality stuff. Hope to see such sort of articles more in future. Ideas Foundation always welcomes good writing.

    Reply
    • January 30, 2018 at 12:51 am
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      Thanks a lot for your kind words and concern.

      Reply
  • January 31, 2018 at 8:29 pm
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    Thanks. This is very good article and got nice understanding about process flow of Bitcoin. But for investing money here there is a highly risk. Because non governmental support, Due to decentralise process we cant claim for anything at a single place and highly uncertainty. By the way my concept is now more clear about bitcoin. Keep it up…

    Reply
  • February 4, 2018 at 5:51 pm
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    A questions comes in my mind, what type of coding is required in solving the problem given to bitcoin miner

    Reply
    • February 4, 2018 at 6:12 pm
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      Hashes of the next block is solved. Algorithm used is SHA256. If I could speak broadly about hash its can be said as a word which contains string and number which are non reversible. This is used in SHA256. Output is 256 bit string. Broadly speaking block contains transaction and block header data. Whenever miner received new transaction, miner integrated them in the next block. Typically speaking hash for the new block is being calculated. All the desired information is contained in the block header data like hash of all transaction in the block which is also called as Merkle Root. Whenever a new transaction comes in a new merkle root is created. Understanding in the simple words, one can say that it is hashing of data into 256 bit number using SHA256 algorithm.

      Now telling you in another way it is about creating new blocks which get added to existing block chain and in response to this creation bitcoin miners are rewarded some bitcoins. Creation of block needs hashing of data into 256 bit number representation

      Hope I have answered your query and thanks a lot for asking such question.

      Reply
  • February 21, 2018 at 1:37 pm
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    You can also search about AI Engine in detecting anomaly in bitcoin process. AI Engine is a next generation programmable network intrusion detection system and supports x86_64, ARM and MIPS architecture over operating systems such as Linux, FreeBSD and MacOS

    With regards
    perfectGuy

    Reply
    • February 23, 2018 at 6:53 am
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      Yes You are right. I think AI engine is the future of intrusion detection and prevention systems. As compared to snort and suricata performance is quite high. You need to configure it with python and supports a lot of protocol including bitcoin. I loved your keen towards new advancement towards technology.

      With Regards
      Glbaat.com

      Reply
  • February 27, 2018 at 11:35 am
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    Hanyecz comment on the bitcoin currency is very amazing and reflects his vision about the bitcoin.

    Though, it’s not about a dish or his daring, it’s about making sure the vision of bitcoin as a cheaper, faster, altogether better online payment system fulfilled.

    “”I came out to post about lightning because I do believe in it. And it’s still in its very early stages, but the lightning network promises to bring back that functionality of being able to buy pizza with bitcoin.”

    With Regards
    Spencer

    Reply
    • February 28, 2018 at 10:46 am
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      Thanks Spencer

      I too liked his attitude.

      With Regards
      glbaat.com

      Reply
  • February 27, 2018 at 11:43 am
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    The Lightning Network is a “second layer” payment protocol that operates on top of a blockchain. It let people instantaneously send/receive payments and reduce transaction fees by keeping them off the main network. It helps Bitcoin be more useful as a day to day currency. This could proof to be a turning point in the development of concurrency.

    Saul 

    Reply
    • February 28, 2018 at 10:45 am
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      Thanks Saul
      But wait what would happen because new things time to implement.

      with regards
      glbaat.com

      Reply

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