Many individuals have heard of the advantages of bitcoins but many do not fully understand how they work or why they are popular. A transaction is actually pretty simple. You send it to someone else, and in return you receive payment in the form of a coin. The transactions are secured by proof of some kind, whether this is public or private. But what is it that makes bitcoins so special?
First of all, let us explain why we use cryptography and why the transaction of bitcoins is secure by proof of some kind. In order to make a transaction secure, we must make sure that nobody can break into our system. With the help of cryptography, we are able to accomplish this goal. With public currencies, the possibility of a government agency tracking down and stealing your coins is near impossible. However, with the existence of some cryptographers and their abilities to produce complex programs that make use of elliptic curve mathematics, the government is no longer able to track down and steal from private individuals.
Low transaction fee
Another benefit of bitcoins is the low transaction fee that is required. This transaction fee is actually a tradeoff. Because there is no central government that controls these currencies, each one is prone to natural problems like inflation and political instability. With bitcoins, the chance of political upheaval is practically non-existent and the risk of inflation is also significantly low.
Another advantage of bitcoins is the fungibility of the currency. Unlike traditional currencies, which must be stored under lock and key by the government or other major institutions, bitcoins are able to be stored in a completely different location. This means that no government, including the US government, is allowed to make you give them your private key in the expectation that they will steal your money. With this protection, you are able to make transactions in the currency of your choice with complete privacy.
Yet another advantage of bitcoins is the comparatively low transaction fees. Most currencies have high transaction fees when compared to the low transaction fees of bitcoins. Transactions are fast as well. While it can take several days to process a payment in US dollars, a payment in bitcoins can be processed within a matter of minutes.
There are some other advantages as well. The most important advantage is that the entire transaction is completely decentralized, which means that no single government or central bank controls it. This means that there is no chance that someone will tamper with your transactions or even hack into your computer. There is also no need for a private key because all transactions are done with the public keys of users. Even if you move your private key, your transactions are still secure on the bitcoin address you originally set up.
In addition to being free from government controls, bitcoins also offer a lot of convenience. One advantage is that it is easy to use a bitcoin wallet to complete all of your online transactions. You do not have to provide a password or even provide any security information when you want to make a purchase or send a message to a friend. This is because all of your transactions are done completely behind the firewall of your private wallet. Thus, you can transact as you wish, making it incredibly easy to use a wallet for all of your financial transactions.
Even though bitcoins offer many benefits over traditional currency systems, they are not perfect. Perhaps the biggest drawback of using bitcoins is the ease of hacking into your computer. Since your transactions are done entirely off the internet, it is easy for hackers to break into your computer and learn what you are sending. If you are using a public wallet, this may not be an issue, but if you are using a private wallet, then you have virtually no protection from hackers. If you are using the Internet to make payment, this can be a big problem.