Over the past year, Bitcoin has blown beyond proportion and have become one facet of online trading and investments that individuals have been looking towards. While Bitcoin is an online currency that only a select few knew how to mine, this cryptocurrency has turned into something entirely viable for good investments. In spite of its growing popularity, there is still a lot of mystery and uncertainness surrounding this cryptocurrency.
What Are Bitcoins?
If you are thinking of investing in Bitcoin, or are planning to pay for something using Bitcoin, it is important for you to understand the intricacies of this currency. The fact that Bitcoin is an online currency is well known, but how does something that exists only in the virtual world function in our society?
To be able to properly understand this, we must trace back to the roots of Bitcoin and how they came into existence. A man named Santoshi Nakamoto first came up with the idea of creating an online currency back in 2009. During that time, the only currencies being used were the ones that were regulated by the government. This meant that there was a certain amount of government intervention with every transaction that was being undertaken. The inventor decided to create a software that would generate these coins through specific processes, that could then be used for transactions across the web.
At the time, the concept seemed so foreign that it only caught on in circles that were familiar with software development and networking. However, in the past two years, the thought of owning Bitcoin has spread even to those whose internet use is limited to Facebook and Youtube.
There are two main methods through which people are able to acquire Bitcoin. One of these is through Bitcoin mining, and the other is from Bitcoin trading. Bitcoin mining entails using a computer software to solve a series of algorithms and codes to be able to unveil Bitcoin. The second method of acquiring Bitcoin and the easier option for the common person is through trading.
There are a number of trading platforms that allow individuals to put in real-world currency and then convert that to Bitcoin. This is a form of trading that functions similar to that of the real world stock market and tends to see similar trends across different cryptocurrency options.
The main reason why Bitcoin can be traded with on a stock market-like platform is because of the way they are supposed to mimic real world or physical currency. Just like currency like dollars, yen, rupees, etc., Bitcoin has a certain transactional value that is held against it. Because they need to be bought, they need to have a certain conversion value that people can turn to when trying to convert one currency to another. If you log onto any trading platform, you will see the value of Bitcoin, which is generally shown in the form of dollars. This enables individuals to convert their government-issued currency to digital currency.
The method of mining Bitcoin is a bit more complex than stock market interactions. The main terminology that one needs to be familiar in this regard is blockchains. Contrary to popular belief, a blockchain isn’t a cryptocurrency by itself. It functions as a database that contains the information needed to be able to acquire Bitcoin. This is considered to central technology surrounding the concept of Bitcoin and is something that you should be familiar with.
The blockchain is one of the main reasons why Bitcoin has become viable in the first place. The importance of this is because of the very principles that Bitcoin was based on. Bitcoin isn’t regulated by anyone, or any government like real-world currencies are. There is no gatekeeper protecting the number of Bitcoin that are present in the world, which can make processing this increasingly tricky. A blockchain, in this instance, works as a decentralized database and tracks all of the information concerning Bitcoin transactions. The record that is created of this tends to be permanent, and cannot be altered by an external party in any manner.
The blockchain is also one of the reasons why Bitcoin isnot a hackable currency. Even though there are stills security risks that individuals face when using trading platforms and cryptocurrency wallets, the main centralized system cannot be compromised. It is an incredibly well-known fact that some of the biggest companies, organizations, and banks have been compromised by hackers in the past, and this is something that has had a significant impact on the workings of these institutions.
However, hacking a blockchain is an incredibly difficult task because of all that it entails. If a hacker wants to get information from a blockchain, they have to identify hundreds of computers and compromise them at the same kind, only to find one string of transaction data, which in most instances would provide them with information regarding an amount that is less than one Bitcoin. While there is no such thing as a completely secure system that is free from any kind of external hacking or intervention, blockchains do provide a layer of security that is not commonly found among banks and traditional institutions.
Uses For Bitcoin
Ever since Bitcoin and cryptocurrencies first started to make their way to the public, one of the biggest questions commonly asked was regarding what cryptocurrencies could be used for. While the concept of a cryptocurrency might be cool and intriguing to some, it wouldn’t be of much worth if it couldn’t be used for anything. Because cryptocurrencies are a digital currency, the manner in which one can use them tends to be limited in nature, at least till more avenues and applications for its use pop up.
As it stands, the retail and e-commerce industry is one of the biggest prospects where Bitcoin can actually be used. When the currency was first created, Nakamoto wanted to create a currency that could be used for a varied range of monetary transactions on a peer to peer level. The vision was to create a currency that could be applied to a host of different transactions, particularly when it came to the buying and selling of goods and services online. Since then, more and more retailers have been turning to cryptocurrencies and including these in the forms of payment that people can use.
If Bitcoin does want to evolve as a more well-used currency, their application needs to be prominent on a much wider scale than what it currently is. The retail industry is probably the best avenue for the growth of cryptocurrency, which is why analysts believe that this is the one sector that cryptocurrencies should be applied in is within the e-commerce industry. For cryptocurrencies to reach their true potential, they need to be used on a much wider scale, and the best way to do that is through e-commerce. The reasons why the retail industry is the perfect avenue for the growth of cryptocurrencies is because of the following:
1. Wider Acceptance
The reason why Bitcoin can flourish in the e-commerce industry is because of the inclusiveness that websites want to incorporate. When a brand starts up its e-commerce website, they want to be able to offer their customers with every possible payment option. This attracts a wider audience, thereby helping the brand as a whole.
Because of this, many e-commerce sites have already added Bitcoin as one of their options, thereby allowing customers to pay for goods in this form. This, in turn, leads to greater demand for Bitcoin, leading to it becoming one of the more prominent manners in which people can pay for goods and services.
2. E-Commerce Industries Rely On Innovation
Being innovative is essential for any company that wants to stand out on an online space. Because of the reduction of geographical borders, companies have to compete with others from around the world. The need to evolve and stay on top is a must, and therefore implementing Bitcoin in payment systems is one way to ensure that they are never left behind.
3. Fewer Transaction Fees Are Incurred
At the end of the day, an online site wants to make as much money as they can through their sales. Customers, on the other hand, want to pay as less as possible for the goods that they buy. When using traditional currency, there is a certain amount that has to be incurred as taxes on the amount that is paid and received. Because there are reduced transaction fees when using Bitcoin, it is something that can prove to be beneficial for the brand as well as the customers. This single factor has led to a much wider implementation of Bitcoin as a whole.
4. The Need For Easier Fund Transfers Is Prominent
The e-commerce industry has always wanted to make transactions and transfers as easy as possible. More often than not, fund transfers can take a long period to end up in a person’s account, especially if there is a certain amount of currency conversion involved in this process. Using Bitcoin is incredibly fast and lets the brand or seller get the money faster than they otherwise would. This has encouraged the use of Bitcoin on a much larger scale, thereby contributing to the growth of the cryptocurrency industry.
5. Growing International Markets
As we move towards more digitalized institutions, people and brands from all over the world can easily connect with each other without even moving from the comfort of their homes. For example, in the 1980s, if a person living in the United States wanted to get something from London, they would need to ask someone who was traveling there, or call up the store and wait several weeks or months for their package to arrive. With the internet and e-commerce industry, a person living in the United States can easily shop in a London based store and have the goods delivered to them in no time.
This, however, gives rise to a more pressing issue of currency conversion. The values of currencies differ based on the country that one lives in, which means that the amounts that they would have to pay are also dependent on those factors. Bitcoin eliminate the need to consider international currencies and provide one uniform rate, no matter which part of the world you live in. This has caused more people to turn towards these digital currencies, thereby pushing for the growth of the cryptocurrency market.