چهارشنبه, ۱۸ تیر ۱۳۹۳، ۰۱:۰۳ ب.ظ
Why Use Bitcoin
Bitcoin is a relatively new form of currency that is just beginning
to hit the mainstream, but many people still don’t understand why they
should make the effort to use it.
Why use bitcoin? Here are 10 good reasons why it’s worth taking the time to get involved in this virtual currency.
It’s fast
When
you pay a cheque from
another bank into your bank, the bank will often
hold that money for several days, because it can’t trust that the funds
are really available. Similarly, international wire transfers can take a
relatively long time. Bitcoin transactions, however, are generally far
faster. Transactions can be instantaneous if they are
“zero-confirmation” transactions, meaning that the merchant takes on the
risk of accepting a transaction that hasn’t yet been confirmed by the block chain.
Or, they can take around 10 minutes if a merchant requires the
transaction to be confirmed. That is far faster than any inter-bank
transfer.
It’s cheap
What’s that you say? Your credit card transactions are instantaneous
too? Well, that’s true. But your merchant (and possibly you) pay for
that privilege. Some merchants will charge a fee for debit card
transactions too, as they have to pay a ‘swipe fee’ for fulfilling them.
Bitcoin transaction fees are minimal, or in some cases free.
Central governments can’t take it away
Remember what happened in Cyprus in March 2013?
The Central Bank wanted to take back uninsured deposits larger than
$100,000 to help recapitalize itself, causing huge unrest in the local
population. It originally wanted to take a percentage of deposits below
that figure, eating directly into family savings. That can’t happen with
bitcoin. Because the currency is decentralized, you own it. No central
authority has control, and so a bank can’t take it away from you. For
those who find their trust in the traditional banking system
unravelling, that’s a big benefit.
There are no chargebacks
Once bitcoins have been sent, they’re gone. A person who has sent
bitcoins cannot try to retrieve them without the recipient’s consent.
This makes it difficult to commit the kind of fraud that we often see
with credit cards, in which people make a purchase and then contact the
credit card company to make a chargeback, effectively reversing the
transaction.
People can’t steal your information from merchants
This
is a big one. Most online purchases today are made via credit cards,
but in the 1920s and ’30s, when the first precursors to credit cards
appeared, the Internet hadn’t yet been conceived. Credit cards were
never supposed to be used online and are insecure. Online forms require
you to enter all your secret information (the credit card number, expiry
date, and CSV number) into a web form. It’s hard to think of a less
secure way to do online business. This is why credit card numbers keep
being stolen. Bitcoin transactions, however, don’t require you to give
up any secret information. Instead, they use two keys: a public key, and
a private one. Anyone can see the public key (which is actually your
bitcoin address), but your private key is secret. When you send a
bitcoin, you ‘sign’ the transaction by combining your public and private
keys together, and applying a mathematical function to them. This
creates a certificate that proves the transaction came from you. As long
as you don’t do anything silly like publishing your private key for
everyone to see, you’re safe.
It isn’t inflationary
The problem with regular fiat currency is that governments can print
as much of it as they like, and they frequently do. If there are not
enough US dollars to pay off the national debt, then the Federal Reserve
can simply print more. If the economy is sputtering, then the
government can take newly created money and inject it into the economy,
via a much-publicised process known as quantitative easing This causes
the value of a currency to decrease. If you suddenly double the number
of dollars in circulation, then that means there are two dollars where
before there was only one. Someone who had been selling a chocolate bar
for a dollar will have to double the price to make it worth the same as
it was before, because a dollar suddenly has only half its value. This
is called inflation, and it causes the price of goods and services to
increase. Inflation can be difficult to control, and can decrease
people’s buying power. Bitcoin was designed to have a maximum number of
coins. Only 21 million will ever be created under the original
specification. This means that after that, the number of bitcoins won’t
grow, so inflation won’t be a problem. In fact, deflation – where the
price of goods and services falls – is more likely in the bitcoin world.
It’s as private as you want it to be
Sometimes, we don’t want people knowing what we have purchased.
Bitcoin is a relatively private currency. On the one hand, it is
transparent – thanks to the block chain, everyone knows how much a
particular bitcoin address holds in transactions. They know where those
transactions came from, and where they’re sent. On the other hand,
unlike conventional bank accounts, no one knows who holds a particular
bitcoin address. It’s like having a clear plastic wallet with no visible
owner. Everyone can look inside it, but no one knows whose it is.
However, it’s worth pointing out that people who use bitcoin unwisely
(such as always using the same bitcoin address, or combining coins from
multiple addresses into a single address) risk making it easier to
identify them online.
You don’t need to trust anyone else
In a conventional banking system, you have to trust people to handle
your money properly along the way. You have to trust the bank, for
example. You might have to trust a third-party payment processor. You’ll
often have to trust the merchant too. These organizations demand
important, sensitive pieces of information from you. Because bitcoin is
entirely decentralized, you need trust no one when using it. When you
send a transaction, it is digitally signed, and secure. An unknown miner
will verify it, and then the transaction is completed. The merchant
need not even know who you are, unless you’ve arranged to tell them.
You own it
There is no other electronic cash system in which your account isn’t
owned by someone else. Take PayPal, for example: if the company decides
for some reason that your account has been misused, it has the power to
freeze all of the assets held in the account, without consulting you. It
is then up to you to jump through whatever hoops are necessary to get
it cleared, so that you can access your funds. With bitcoin, you own the
private key and the corresponding public key that makes up a bitcoin
address. No one can take that away from you (unless you lose it
yourself, or host it with a web-based wallet service that loses it for
you).
You can create your own money
In spite of the amazing advances in home office colour printing
technology, most national governments take a fairly dim view of you
producing your own money. With bitcoin, however, it is encouraged. You
can certainly buy bitcoins on the open market, but you can also mine your own
if you have enough computing power. After covering your initial
investment in equipment and electricity, mining bitcoins is simply a
case of leaving the machine switched on, and the software running. And
who wouldn’t like their computer to earn them money while they sleep?
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