Introduction To Bitcoin:

Starting out in January 2009, this method of payment has errupted in popularity over the past 4 years and is becoming an increasingly recognised and accepted method of payment across various shops and venues throughout the world. Take this café in the Netherlands for instance. The payment method was established here in 2013:

Bitcoin, according to Bitcoin.org is a new variation of money which uses peer-to-peer technology to process transactions. It is an open source, decentralised payment system meaning that it doesn’t have a central regulating authority and banks are not involved in transactions. Transactions are carried out directly between the involved parties. It is also referred to as cryptocurrency because it utilises military-grade cryptography to protect against fraud.

Bitcoins can be purchased from someone who is using a standardised currency. Alternatively, they can be earned through a system referred to as Bitcoin Mining. Bitcoins are stored in Bitcoin wallets which in turn manage addresses from which you are able to send and receive payments. New and unique addresses can be generated for each transaction and this can be carried out as many times as needed.

Advantages:

Efficiency of Payment

Similar to the Paypal system, once configured you are able to make fast and simple payments using a variety of platforms whether it’s via an app on your smartphone, software on your computer or a web application. The bitcoin method does not require any PIN confirmation, details regarding your credit or debit card and neither does it request for any documents to be signed. The program only needs to know the location in which you are transferring the funds.

Secure Transactions

According to an article by “Dr. Chukwumah Ezeobika M.D.” on Yahoo Voices, the payment itself is secure as the software utilises military grade cryptography which ensures the transactions remain secure. No-one except the owner of a wallet can carry out payments or transfers from a wallet. Despite this, the security of bitcoins is dependent on the steps users have taken to secure their bitcoin wallets.

Anonymous Payments To A Certain Extent

The identity behind Bitcoin wallets are private. Wallets use addresses in transactions and these are also created privately. Using an address once in relation to a single transaction guarantees privacy and anonymity. Despite this, Bitcoin transactions are traceable, public and once logged, permanently remain on the Bitcoin network. IP addresses of users on this network can also be logged. Therefore, if a user employs just one address for multiple transactions, it is possible for a trace to be initiated and if the IP address of the user has been logged that person’s identity may be uncovered. This can be avoided if that person uses a different address for each transaction and then hiding their IP address using a service such as: Tor.

Disadvantages:

Illegal Activity

While the implementation of Bitcoins has brought about many advantages, it has also given birth to climatic security implications. Its presence has since inadvertently compromised unsuspecting victims. Internet thieves have created a relatively new variant of malware which is referred to as “Ransomware.” One example of this is the notorious: “Cryptolocker.”

Once executed, this program locks the victim’s computer and begins encrypting every file on their system with a complex password that the perpetrator has set. Brute Forcing into these files isn’t an option because the code is too complex. This program is usually able to manifest itself on the person’s computer after the victim unknowingly runs an attachment within an email that claims to be something else.

If the device has not been backed up and you are hit with this threat then you’re only choice at this time is to transfer bitcoins to the attackers. This kind of transaction allows relatively anonymous payments to be made.

Conclusion

Bitcoin offer a seamless service albeit slightly flawed in regards to certain security aspects.

Thank you very much for reading this article. Please let me know your opinions on Bitcoin within the comment section below:

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