In 2008 Satoshi Nakamoto, whose real identity is still unknown, created the bitcoin protocol and its reference software Bitcoin Core, which was published in an article on a cryptography website. Since then the boom of cryptocurrencies and their use has grown exponentially and today in the market we can acquire a fairly wide variety of virtual currencies (cryptocurrencies), the most popular being the Bitcoin (BTC).
The Bitcoin operating system is as follows:
- Each network member called a node stores a copy of each financial transaction.
- A node is a computer/chip connected to the bitcoin network using software that stores and distributes a real-time updated copy of the block chain.
- Each time a block is confirmed and added to the chain it is communicated to all nodes and this is added to the copy that each node stores.
The 7 main characteristics of Bitcoin
- The number of units can never exceed 21 million bitcoins.
- No one can prohibit or censor valid transactions.
- The Bitcoin (BTC) source code must always be accessible to everyone.
- No one can prevent participation in the network.
- No identification is required to participate in the Bitcoin network.
- Each unit is exchangeable.
- Confirmed transactions cannot be modified or deleted. History is indelible.
The main advantages and disadvantages of Bitcoin.
Main advantages of Bitcoin:
- Bitcoin (BTC) is a virtual currency (cryptocurrency) not controlled by a central bank: we have repeated this ad nauseam, but this is one of its main advantages. No authority can control its market value, so the purchasing power of the currency remains stable. In fact, because its issuance is capped at 21 million bitcoin (BTC), it makes more sense for it to appreciate over time.
- You cannot counterfeit this money: actually there might be such a possibility, but it is very difficult to go unnoticed by a network that is managed by millions of people, sooner or later you would be caught.
- No barriers when paying with bitcoins: There are no geographical barriers for bitcoin, as long as there is the possibility of paying with bitcoin you can do it like any other money payment.
- No intermediaries: We can make the Bitcoin payment directly, without the need for intermediaries (such as banks through credit cards) of any kind. Making transactions much cheaper.
- Security: the cryptographic system of the Bitcoin currency is very secure, much more than those used by banks.
- Open source: anyone can access the network and view transactions, as well as implement improvements, among other things. Always through a consensus system.
- Characteristics of a virtual currency (cryptocurrency): Due to the fact that it is a virtual currency, the durability and portability it has is far superior to the cash we can dispose of. This is a great advantage of Bitcoin.
Main Bitcoin disadvantages:
- Although today there are already establishments that accept payments with bitcoin and other cryptocurrencies, it is still far from a mass use as a payment of money.
- There is no regulatory body to support it, and that creates distrust towards cryptocurrencies.
- Since its creation, it has endured great volatility in the cryptocurrency market.
- Given its characteristics, it has been used as a form of payment on the black market in cyber attacks and has been linked to arms smuggling, child pornography, terrorism and drug trafficking.