Bitcoin and modern technology

There are several currencies in the world today, most of which are tied to a single country and hence only useable inside the borders of that country. The most common currencies include the dollar, euro, pound, and yen, among others. Bitcoin is the first decentralized digital currency, and the Bitcoin system operates without an administrator.


Satoshi Nakamoto, whose identity remains unknown, invented Bitcoin as a digital money in 2009. It was afterwards released as open-source software to individuals all around the world. In contrast to other typical online payment options, Bitcoin offers lower transaction fees since it does not have centralized authority like government-issued currencies (Bitcoin). The purpose of decentralization for Bitcoin is for secure storage and payments without involving institutions like banks or individual’s names.


Bitcoins are not physical, and they revolve around balances and Bitcoin transactions which are stored in a public ledger in the cloud. Activities revolving around Bitcoins run on “miners” powerful computers that conduct transactions and reward Bitcoins. Bitcoins are widely adopted across the globe for many reasons such as some people want money free from government control and bank charges as they believe it to be more valuable. Other people like privacy and Bitcoin allows users to be private and anonymous transactions which cannot be traced back to the individuals when purchasing illegal items like drugs or weapons (McGoogan & Titcomb). Bitcoins are very valuable and in July 2017 around 16 million Bitcoins were in circulation, and the value of a Bitcoin was placed at around $ 1268 which exceeds the value of one ounce of gold.


Bitcoin uses peer to peer technology (p2p), and management of transactions is done collectively by the Network (Bitcoin). Bitcoin works on a public ledger referred to as blockchain, and the blockchain holds the records of transactions updated by all the Bitcoin users in the network. Creation of Bitcoins involves users generating blocks whereby each block is generated cryptographically through harnessing computer power of the users which is then added to the blockchain. Balances in Bitcoin are kept through public and private keys, and the keys are a combination of many numbers and letters linked through mathematical encryption algorithms (Investopedia). The public keys of Bitcoins are like the address visible to the world which other users may send bitcoins while the private key is not visible and is used to authorize the Bitcoin transmissions.


The process which Bitcoins get released for circulation is called Bitcoin mining which is very hectic. Bitcoin mining entails solving computational puzzles which are difficult for a new block discovery which is then added to the blockchain, and the reward is in the form of bitcoins (Investopedia). As time goes by the block reward reduces as the mining process increases in difficulty leading to the miner's adoption of techniques like using Application Specific Integrated Circuits (ASIC).


There are numerous ways in which Bitcoins can be used such as funding organizations, investment, money transfer. Users can spend the Bitcoins in their possession at different places like Dell websites and some pubs. As an investment, others hold the Bitcoins till the value surges to attain massive gains. Bitcoin business has proved to be very lucrative since it can be exchanged for normal currencies and this has attracted investors who aim to make more money from the exchange of Bitcoins. The Investors use the principle of buy low and sell high to earn maximum gains from the venture. It safe to invest in the Bitcoin business as it is safe from fraud and cases of theft because of the decentralized set up it has. Bitcoins as cryptocurrencies are subjected to taxes not as traditional currencies but rather as property (McGoogan & Titcomb). The profits or losses associated with Bitcoins will be regarded as capital gains and losses.


A user can earn Bitcoins in various ways such as payments for sold goods or services. The transactions to transfer Bitcoins are made successful using hardware terminals or wallet access of QR codes. There are also additional tools like Coinbase and BitPay which are called Bitcoin merchant tools for online payment. Another way a user can get Bitcoins is through working for them whereby the self-employed individuals get paid in Bitcoins in websites that are dedicated to digital currency (Investopedia). Other users gain Bitcoins through interest payments after lending them and getting repaid in Bitcoins. The lending of Bitcoins may involve direct lending to people whom you know and virtual banks like Bitbond, or BitLendingClub. Gambling can also be a means of earning Bitcoins through online lotteries that cater to Bitcoin aficionados.


Satoshi Nakamoto was creative while developing the Bitcoin as a cryptocurrency because there was a limit to the maximum number of Bitcoins that can be developed. The limitation to the maximum number of Bitcoins created helps to prevent the dilution of their value. The maximum number of Bitcoins that can be created is 21 million and currently, there are over 16.7 million Bitcoins in circulation already. Despite the many benefits of Bitcoins, there are several risks associated with it such as regulatory risk since it is a rival to the traditional currencies and may be used to promote illegal activities; thus it may be banned by governments creating losses to Bitcoin owners (Investopedia). Unlike the banks where money stored safely, Bitcoins are at risk from hackers, malware which may give the malicious hackers access to all the Bitcoins of the user by using the private key of the user.


Works Cited


Bitcoin. “Bitcoin is an innovative payment network and a new kind of money.” 2017. Retrieved from: https://bitcoin.org/en/


Investopedia. “Bitcoin”. 2017. Retrieved from: https://www.investopedia.com/terms/b/bitcoin-classic.asp


McGoogan, Cara and Titcomb, James. “What is Bitcoin, How Does it work and What Affects its Price?” Telegraph. 2017.Retrieved from: http://www.telegraph.co.uk/technology/0/what-is-bitcoin-everything-need-know-about-the-cryptocurrency/

Deadline is approaching?

Wait no more. Let us write you an essay from scratch

Receive Paper In 3 Hours
Calculate the Price
275 words
First order 15%
Total Price:
$38.07 $38.07
Calculating ellipsis
Hire an expert
This discount is valid only for orders of new customer and with the total more than 25$
This sample could have been used by your fellow student... Get your own unique essay on any topic and submit it by the deadline.

Find Out the Cost of Your Paper

Get Price