Hello all, and welcome to our first post. Today we’re gonna be talking about Bitcoin and the technology that sits behind it: blockchain. It’s a bit of tech which gets a lot of attention, and here at Top Tech Writer, we are very interested/excited by it.
So firstly, what is Bitcoin?
Bitcoin is the most popular cryptocurrency. A cryptocurrency is a digital currency which is created, held and used digitally. What makes a cryptocurrency different than usual currencies such as dollars and euros, is that it is decentralised. Where normal currencies are controlled by an institution or bank, Bitcoin is controlled by the every machine that mines bitcoin (how bitcoins are created) and processes transactions. This makes up a network, where anyone can join and in which all the machines work together.
How does it work?
Bitcoin and blockchain technology is extremely complicated. However, the basic premise only needs to be understood for anyone to use it. Below shows a simplified explanation of how the technology works…
- A user will install a bitcoin wallet on a computer/tablet/mobile phone.
- The wallet will generate a specific address for that user (they can create multiple addresses as these should only be used once).
- This address is then passed onto whoever needs to send bitcoins.
- The buyer will then enter an amount to be transferred from their wallet address to the seller’s address. This transaction will be ‘signed’ by a secret piece of data known as a private key. This tells the network where the transaction has come from (not literally) and also ensures the amount cannot be altered. The transaction is then added to the network and waits to be added to the blockchain.
- The blockchain is the shared public ledger/network with which ALL confirmed bitcoin transactions are held. Every time a new transaction is confirmed, its details are added to the chain (hence the name). As it’s a pubic ledger and is stored on thousands if not millions of devices worldwide, it is near on impossible for anyone to cheat the system and spend bitcoins which they do not have.
- Transactions are added to the blockchain when they are processed or ‘mined’. This is a lottery process so that no one entity can control what gets added to the chain and when. Processing normally takes around 10mins.
If you’ve managed to understand that and would like to read into more detail how it all works (especially the mining process) then go here.
Where can you use Bitcoin?
The majority of people have heard on Bitcoin through it’s association with the dark web and it’s marketplaces (Silk Road etc.). The reason the cryptocurrency has been utilised in the dark web, is down to it’s anonymous qualities. Bitcoin transactions do not track any personal information of the buyer/seller and so this anonymity aids the often seedy underworld of the dark web.
Bitcoins are not just used on the dark web though. The number of things you can buy with bitcoins is growing every day. Many e-commerce stores such as Dell and Microsoft allow the purchase of some of their goods by Bitcoin, airlines such as CheapAir.com and Air Baltic also accept the currency for flights, and also physical stores such as CeX and Reeds Jewellers accept the currency in store.
Why use bitcoin?
One of the main reasons people use the cryptocurrency is because it is decentralised. People have grown disillusioned by having their currency governed and controlled by national bodies and banks.
In comparison to holding money in a bank, Bitcoin is easier to setup and quicker/cheaper to use. For instance, transactions can be sent worldwide within minutes at minimal cost, unlike banks which charge fees.
People can also use bitcoins to get discounts. Purse.io is a peer-to-peer marketplace that matches individuals wanting to buy items on Amazon at a discount with others wanting to buy bitcoin with a credit card or via PayPal. The service claims potential discounts of up to 20% for bitcoin shoppers.
So what do you guys think about it? Do you already use Bitcoin? Would you be interested in it?