Research Paper On Bitcoins

806 Words4 Pages
What are Bitcoins and How do They Work? Unlike dollars and Euros, bitcoins are wholly virtual. They are being touted as substitutes for normal currencies in the years to come. This is evidenced by the growing number of organizations and business establishments that are accepting cryptocurrencies. Bitcoins are the most popular cryptocurrencies. This virtual currency was created in 2009 by a mysterious figure only identifiable as Nakamoto Satoshi. His true identity has never been known. Bitcoins have appreciated in value from the cents they were worth in 2009 to the current of $20,000 apiece in December 2017. Bitcoins are decentralized as they are not regulated by any central authority. It represents a peer-to-peer method of payment where a…show more content…
The number of bitcoins that you will be able to buy will depend on the prevailing value of bitcoins on that specific day. Once you have made an order for the purchase of bitcoins, this is information is stored in a public ledger. On this ledger, the balance on each wallet address is publicly displayed. This helps ensure that there is transparency in the buying and selling. After buying the virtual currency, you can then use it to transact online. You can spend it on companies that accept bitcoins as a medium of payment. Alternatively, you can just buy the currency and wait for it to appreciate then sell it for a profit. All the information regarding the purchase and the selling of cryptocurrencies is stored in a block chain. What this technology does is to confirm that the individual or organization spending the virtual currency owns them. This helps in prevention of double-spending and fraud. Pros of Bitcoins The use of this virtual currency has several advantages. For instance, being the first cryptocurrency in the market, it enjoys the first mover advantage. It’s always ahead of other currencies such as Litecoin, Ripple and Dash. Another advantage with bitcoins is that its supply is fixed. That means that it will never be subjected to inflation. The value will keep increasing due to the increased demand but fixed supply. Since its operations are decentralized, transacting in cryptocurrencies costs less and the lead times are shorter. The transactions are
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