The popularity of the bitcoin technology continues to rise in recent months. More individuals are starting to use this particular method of payment online because it offers privacy and fungibility as well as many other benefits. But what is the basic idea behind the technology? And why is it becoming so popular now?
The main reason behind the popularity of the technology is the fact that it is resistant to manipulation by outside parties, whether the government or corporate interests. The core function of the bitcoin network is to process transactions quickly and efficiently without the use of a bank or other third party entities. The entire system works under the assumption that each transaction is made from a new public key. Transactions are secured by the combined efforts of all users of the bitcoin network.
Transactions between individual users of the system are protected by the cryptographic strength of the bitcoin protocol. Transactions are listed in a public ledger known as the bitcoin ledger. This public ledger is accessible to everyone via the bitcoin p2p network. Transactions are recorded in the form of digital certificates, which serve as proof of the validity of the transaction. The digital currency is mathematically secured by the presence of an ongoing, globally trusted set of validating authorities.
As was briefly mentioned above, the entire system operates in the absence of third-party entities. This is due to the nature of the design of the bitcoin protocol. The system operates as follows: when a user wants to buy a product with PayPal, he sends a request to the bitcoin miner who then finds a match in the list of available transactions. The miner then sends the transaction request to the relevant digital currency exchange. When the requested digital currency exchange accepts the transaction, a new digital currency is created known as bitcoin.
To be more specific, when you use a website that allows you to transfer money online to another user, you are actually transferring a percentage of one of the currencies in his balance. If the exchange site that you are using does not support the operation of third-party currencies, then you will most likely be able to transfer your funds to an equivalent currency in the bitcoin network. You can transfer your funds to any other digital currency in the system at any time that you want. Digital currencies are backed by the infrastructure of the bitcoin network.
To get bitcoins, all you need to do is visit one of the bitcoin exchanges. There are several such sites available. The advantage of using the internet to transfer money is that it is fast and free of charge. In addition to this, the exchange rates offered by the websites that allow you to get bitcoins are quite low compared to the rates that you would get from banks and other financial institutions. This factor has made the online exchange systems quite popular among internet users who wish to transfer their money to bitcoins.
Another advantage of the internet transaction system like bitcoin is that it provides security. Unlike cash, which travels through banks, transactions made with bitcoins are protected from thieves. This security measure is achieved by using complex mathematical algorithms known as “cryptography”. The bitcoin network is run under a system of sophisticated encryption, which make it impossible for any outside party to have access to the inner workings of its inner workings. This feature gives the users of bitcoins the feeling of making transactions like they are conducting business with a bank.
The last benefit of using the internet to transfer money and to get bitcoins is that these types of services usually offer generous incentives to users who participate in the bitcoin network. If you are an individual with modest financial resources but you are interested in participating in the bitcoin economy, then there are some ways in which you can join the network without having to spend a lot of money. One way is by engaging in what is called “proof of work”, where you agree to provide computing power and storage space to a certain company. In return, you will be awarded with a certain number of bitcoins. By being rewarded with these bitcoins, you can save up to fifty percent of what you would pay for a traditional transaction made with banks.