Bitcoin: A Digital Currency Revolution

Bitcoin: A Digital Currency Revolution

1. Introduction

1.1 is a brief summary of how Bitcoin works. Bitcoin is a distributed peer-to-peer digital currency that can be transferred instantly and securely between any two people in the world. It's like electronic cash that you can use to pay friends or merchants.

Bitcoin is the first implementation of a concept called "cryptocurrency," which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. The first-ever proper form of cryptocurrency came about with the creation of Bitcoin, which was in 2009.
Bitcoin operates as an open-source and peer-to-peer system and is an independent currency, free from the influence of any single government or institution. This means that the user has full control over their money and is free to send any amount of money to anyone, anywhere in the world at any given time. No third parties are required.

The introduction of the essay talks about the invention of Bitcoin and the possible effects of virtual currency on the present and future world. It also discusses the benefits and risks of virtual currency to society and how society may adapt to it.

1.1 What is Bitcoin?

The central idea in this essay is to explain the option of Bitcoin as a digital currency. This demands a thorough explanation of what it is and its functions as a currency. In section 1.1, the writer begins by explaining some situations in which bitcoin would be useful. It then gives a brief explanation of what bitcoin is and how it works. The section finishes with an explanation of "Bitcoin mining" and how new bitcoins are created. This section is logical and flows well because each paragraph is linked to the next with a smooth transition. The linking word at the start of each paragraph helps achieve this smooth flow and makes it easy for the reader to follow.

Bitcoin was created by an anonymous developer as a unique type of virtual currency. It is a type of digital currency in which a balance can be kept and used to purchase goods from companies that accept the currency. It avoids the heavy fees from bank to bank transfers because it is transmitted peer to peer. All transactions are publicly documented with no personal information. This is where some people may find an advantage in using bitcoin because customer purchases are not able to be traced back to them. Finally, it is a currency that is not tied to any country and not subject to regulation.
The writer uses multiple rhetorical devices to help emphasize his argument and engage the reader. When speaking...

1.2 History of Bitcoin

The history of Bitcoin is brief, but powerful. The original idea was conceived by a person identified as a pseudonymous man named Satoshi Nakamoto, who sought to create a form of money that was independent of any government or corporation. He had the brilliance to pull together several prior attempts at digital cash, consolidate their methods, and in some cases extend them, eventually creating the first and still the most successful cryptocurrency. In order to establish the newly created form of currency, Nakamoto used a method that imitated the discovery of gold, by having people use their computers to compete to process complex mathematical equations; the winner being awarded with a number of Bitcoins. This practice is called mining, and while it is still a viable method, the large amount of competition and processing 'difficulty' has placed it out of the realm of possibilities for an average consumer. Step by step, the currency grew to widespread usage among a small group of devotees. In a very fortuitous turn of events, someone stumbled across a web forum where Bitcoin was mentioned, leading to the purchase of two Papa John's pizzas for 10,000 Bitcoins. This was the first recorded commercial transaction using the currency, and shortly after the pizzas were gladly tendered for the coins. A traded value was assigned to Bitcoin for the very first time. In time, the currency has seen some dramatic fluctuations in value, speculation causing it to peak at over $30 in 2011, when it had been virtually valueless just over a year prior. Since then, there has been a consistent uptrend in both transaction volume and value, and the currency has reached a level of relative stability - actually fluctuating less in value than some government-backed currencies around the world.

1.3 Advantages of Bitcoin

- Reduced fees and micropayments - Transaction fees with Bitcoin are generally a lot less than with traditional methods of payment. Often, it is a facilitator that can incentivize a totally new type of business model. An example of this could be a content-based site that only receives a tiny amount from each user. By using Bitcoin, this small amount could still translate to a feasible sum.

- No third party seizure - For those living in countries with untrustworthy banking systems and unstable governments, using Bitcoin can provide a way out of having their assets in banks or national currencies which are often devalued, frozen, or seized.

- Identity theft prevention - Using Bitcoin rather than credit cards, consumers can protect themselves from the possibility of identity theft. The knowledge requirement for spending with Bitcoin is a useful way to prevent identity theft.

- Provably fair - Due to its cryptographic nature, Bitcoin is extremely provable in terms of fairness. It can be used in applications that affect an organization's financial system. Importantly, this can all be done without the need for a trusted third party.

In order to widely use its potential, Bitcoin has various potential advantages compared to traditional government currencies. Here are just a few possible advantages:

1.4 Challenges and Concerns

The global nature of cryptocurrencies and the high degree of privacy (pseudonymity) that they provide, combined with the high degree of tradeability and direct access, makes it feasible for cryptocurrencies to become a primary vehicle for money laundering and illicit finance. The bitcoin ecosystem already contains many methods of converting bitcoin from fiat, some more legitimate than others. P2P (person to person) exchanges such as LocalBitcoins allow a degree of trade with cash and anonymity. More legitimate methods are not infeasible, however. A future where the digital currency is the sole method of trade for most goods and services is a future where the global populace is forced to interact with the traditional banking system only to fulfill the legal requirements of their local government in regards to taxes, but without the ability to use available banking products to save or invest for the future. This is because banks do not want to engage with bitcoin companies, fearing reputational damage and/or that the bitcoins may be associated with illegal activities. This stance of the banks is not without justifiable due to the FDIC's stance on the legality of their insuring traditional USD deposits against services that purposefully or unintentionally facilitate the trade of illegal goods and services. One potential side effect of this reluctance will be the creation of a detectable and subclass of income rates among those who earn money through traditional employment that must be deposited in a bank and those who are either self-employed or earning money through the gig economy who may soon find it impossible to convert earnings to bank deposits.