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An Overview of Bitcoin Exchange

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Posted on May 16, 2016

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We are currently inhabiting a world which is guided by such technological advancements which cannot be anything short of a revolution. The booming rise of the internet is evident through the introduction, acceptance and proliferation of internet trading.Trading is an activity which strives on the foundation of trust and absolute faith. It has even then found a comfortable seat in the unfamiliar realms of the internet. A further interesting kind of online trading is Bitcoin Exchange.

What is Bitcoin, after all?

Bitcoin is a decentralized digital currency which works only in the virtul orld through bitcoin accounts known as ‘bitcoinwallets’. The accounts have a specific address and private key, without which the bitcoin stand useless and effectively, lost. Bitcoin, being decentralized, remain tax-free and away from any intrusion by government agencies. Bitcoin can be used for making purchases, transactions as well as for investment purposes. Bitcoin was invented by Satoshi Nakamoto in 2008. Satoshi Nakamoto is a pseudonym used by the maker(s) of bitcoin to maintain anonymity. The transactions are recorded in a public ledger termed as ‘block chain’, which only reveals bitcoin addresses involved in the exchange.

How does Bitcoin Exchange work?

Unlike popular opinion, the working of bitcoin exchange is not radically different from that of a regular currency exchange. Bitcoin can be used to pay for products and services through individual’s bitcoin wallet, access to which is provided by the private key. The bitcoin wallet can be acquired by a bitcoinbroker such as Coinbase. The asset that the user pays is then converted into bitcoin and stored in their wallet. Bitcoins can be exchanged with other users of bitcoin as well.

Transactions under Bitcoin

The fallout of bitcoin can be seen in the fact that once a transaction is made with bitcoin, it cannot be reversed. The option of receiving money through credit cards and PayPal credits will not help you in the case of bitcoin exchanges. It is thus always advised to make transactions with other bitcoinholders who are close to you.

To transfer bitcoin from your wallet to another person’s wallet, you require your and the receiver’s bitcoin address only, along with the amount of bitcoins you want to send. Transaction under bitcoin is a quick process and remains anonymous as no real-world information is shared on the bitcoin network. However, the information of all the transactions gets stored in the block chain.

Benefits of Bitcoin Exchange

• Quicker and easier transactions

• Transactions can be made from anywhere in the world

• No interference of any third party

• Track all transactions through PC or Smartphone

• Make transactions anytime you want

• Anonymity maintained

Drawbacks of Bitcoin Exchange

• Low level of acceptance in general market

• Instability of currency due to small number of users

• Still in beta phase. Needs new developments and features

• Security issues as anonymity of transactions attracts frauds and scamsters

• No way to recover wallet once the private key is lost

Through the curious case of bitcoin, one observes that this cryptocurrency might be useful in a lot of ways, with the ease of transaction being the most important one; but it also comes with its share of flaws which can lead to serious security and legal issues. A stronger system is thus needed to be evolved in order to make use of bitcoin more effectively and widely.

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