Bitcoin is basically an online currency and just like the regular dollar or euro. The thing is that it is only available in digital form online on various platforms. People use bitcoins not only for the purchase of goods and services but sometimes also in the form of investments. The main difference between the bitcoin and the regular currency is that it is not used as a third party for the exchange purposes. Whenever you are using a credit card to make any of the purchase decision, the money of the customer directly go to the bank or the credit card organization before it reaches the merchant. So, whenever you use bitcoins, the coins in it are sent from the wallet to the merchant wallet without the need of going through any of the financial institution. For some of the parts, it makes the bitcoins transactions anonymous and untraceable. This is one of the benefits of the bitcoins and why people make transactions through this medium.
Bitcoins and its advantages
- It helps in the exchange of money instantly with anyone from anywhere at any time in the world. You can say that it is helpful globally.
- It also helps in eliminating the need to create a merchant account or any other account or use the financial institution.
- The fee charged is low as compared to various other financial institutions.
- There is a minimal risk of identity and since most of the transactions are anonymous, there will be no risk as such related to the identity of the transactions.
- No major fraud can take place with this type of transaction. Nobody can counterfeit bitcoins.
How does the Bitcoins transaction work?
The Bitcoin transaction takes place through a process called mining. To explain it simply, you must go through the following –
The transaction is placed and the computer records all the types of transactions. Then the bitcoin miner verifies the block chain and claim whether it is correct or not. The transaction is verified and the coins are then sent to the merchant. In this, the computer is known as the block chain, and it records the details of the transactions
A computer, called a “block chain”, records the details of the transactions including the time and who owns how many coins. A “bitcoin miner” is any person with a computer that verifies that the details of the chain are correct and confirms the transactions. They’re usually paid a fee in bitcoins as well, thus increasing the supply. Creating a Bitcoin Wallet There are three ways to store bitcoins – using an online wallet, a paper wallet or a hardwire wallet.