What is Bitcoin?

According to the white paper published by Satoshi Nakamoto, Bitcoin is a peer to peer cash which can be sent from one person to another directly without the need for banks. The cash is sent directly through electronic devices.

Why Bitcoin?
Although regular currencies such as Dollar and Pounds can also be traded digitally through means such as credit cards, many factors make Bitcoin different. One of the most valuable aspects of Bitcoin usage is the Blockchain technology. It is a form of database where the financial transactions that occur involving Bitcoin are grouped into blocks of data and “chained” together using sophisticated cryptography. This makes the record permanent which makes it near impossible to go back and rewrite the older data. Furthermore, the most important aspect of the Blockchain technology is that it surpasses the need for a central authority. As the the database is shared with any device that is involved, the system is completely decentralized. If ,for instance, a computer is hacked, the other computers in the system is able to continue and hold the records. This prevents a central institution such as banks to hold excessive power and control over the money. Although the system is accessible from anywhere, the. transactions that occur are completely private and are secured by keys that only the owner owns. The keys are bound by extremely sophisticated cryptographic mathematics that ensures safety.

Benefits of Bitcoin:
1. Irreversible transactions – Not being able to reverse transactions will prevent various sorts of fraud.
2. Time saving – Bitcoin transactions are instantaneous unlike certain transactions which may take days to settle.
3. Cheaper – The transaction fees for Bitcoin range from little to none.
4. Transparency – Records of every transactions are available on the blockchain database which can be accessed from any device from any part of the world.
5. No central institutions – Financial risks taken by banks are eliminated as the whole process is decentralized.

Risks
One of the biggest risks associated with the use of Bitcoins is excessive fluctuations in its value. However, the technology itself is new and will require more time in order to stabilize.

Replace the dollar?

At this stage, due to being relatively new, whether Bitcoin is a viable alternative to the American dollar and our financial systems still remains a matter of debate.