The benefits of Bitcoin as a decentralized network
The aim of creating Bitcoin was to enable people to carry out transactions from any place in the world and that too, 24×7, without the intervention of any central regulatory body such as governments and financial institutions like tarding system. This has been made possible in the case of Bitcoin as its functioning is based on completely decentralized blockchain technology.
What is blockchain technology?
It is a shared database that is accessible to all the of a computer’ network nodes. The information stored here is in digital format. Blockchains are the foundation on which cryptocurrency systems such as Bitcoin, function. This technology is employed for maintaining a transparent, safe, and decentralized record of each transaction that takes place. It guarantees the security of data as data once stored can be shared later but cannot under any circumstances be amended, removed, or destroyed. Therefore, it is easy to trust something without being controlled by the third party.
A blockchain stores data in blocks. Whenever a miner mines a bitcoin, a block is added to the blockchain which will be storing new data. Thus, a chronological series of blocks is established. Each block is identified by a hash code. A hash code is created by a mathematical algorithm in which the digital data is stored as a string of numbers and letters. All the times stamps get encrypted in the blockchain which makes it utterly difficult for anyone to alter with the time frame. This is why the transactions are safe. Due to its transparency and access to all owners, this decentralized technology has become the basis of all types of cryptocurrency systems.
Benefits of the decentralization system of Bitcoin
As mentioned above, the transaction details once stored in the blockchain can be later accessed by all the nodes that are part of the computer network but the data cannot be tampered with. This is because of the complex hash number attached at the end of each block and also the time-stamp. If attempts are made at any of the nodes to alter data, the person attempting to do so has to compute the existing hash code. It is almost impossible to do so but if he is successful in decoding the hash, not only the current hash but all the preceding hash codes will get altered as they are linked. The time-stamp will also change. This can be easily detected by the other Bitcoin owners and the node where the attempts were made can be identified.
The transparency in this decentralized system has been one of the significant factors that has enabled Bitcoin to become widely accepted by financial pundits, traders, and investors. People are highly appreciating this and using it more than earlier. Anyone willing to foray into the crypto market can buy Bitcoin from a valid cryptocurrency trading platform like Bitcoin Era and start trading right away.
- Accessible to all
With fiat currency, only those who have a bank account can send or receive money. The decentralized nature of Bitcoin has made it possible for anyone with a secure internet connection to make transactions. Earlier, people in remote places, in the absence of banks or other financial institutions, were denied access to any kind of financial transactions.
- Transactions made possible across the globe
Cross-border or financial transactions to any other country via the regular currency route have several constraints. Banks charge a hefty transaction fee. In fact, the transactions also take a certain amount of time. The currency value of the destination country also plays a significant role in how much money the person receiving the payment will finally get.
Bitcoins have uniform value worldwide as they are not regulated by regulations laid down by governments and banks. Making transactions within a country or across the globe to a faraway country has no effect on the transaction rate and time taken to settle the transaction.
Before the introduction of Bitcoin, the established norm for all financial transactions was to follow regulations and procedures set by a central authority. The decentralized system of Bitcoin has successfully revolutionized the global financial scenario with its novel concept. It has ensured that access to financial transactions reaches everyone, everywhere.