Is Bitcoin an innovative digital currency is a question that is probably uppermost in the minds of investors. Bitcoin is an electronic currency that can ensure transactions between parties without the need for an intermediary like a bank or any financial institution. All you must do is download a wallet to buy and send these crypto coins. All transactions are protected by private keys, a distinct cryptographic signature that allows only you to access your money. The most striking feature of the Bitcoins is that unlike fiat currencies, it is neither issued nor regulated by governments; so, it does not belong to any specific individual.
Bitcoin is definitely an innovative currency because the medium of transfer is similar to sharing audio or video files. It uses a peer-to-peer payment method where the network reliability is dependent on a cryptographic protocol. So, there cannot be instances of double spending, something that is very much possible in traditional currencies. Users do not have to provide their personal details to make transfers; neither do they have to pay third parties for processing payments. In short, the Bitcoin payment system is far more transparent.
Prices of the Bitcoin tend to fluctuate sharply, impacted by negative and positive government and financial institution decisions. For transactions to be recorded in the Bitcoin blockchain, they have to be first validated as genuine. For this, miners use specialized computers to solve complex crypto puzzles to make sure the blockchain is genuine. In return, they are paid in Bitcoins. Bitcoins have been designed such that once 21 million BTC have been mined, there will not be any more Bitcoins left to mine. This is why you can view Bitcoin as an alternative currency that will not easily depreciate, since regular currencies are always under the threat of depreciation because their banks tend to increase the supply, bringing down prices in the process. Moreover it can be insurance for you in case a government decides to enforce capital controls.
A currency is an asset that one can use to buy or sell products. Its value depends on its utility, and this in turn, depends on how much investors and consumers trust it and adopt it. Bitcoins are being increasingly adopted by merchants all over the world. However, its use is still marginal when compared to global currencies as the USD. The number of businesses embracing Bitcoins is likely to go up as transaction costs are being cut down. Retailers have to pay steep fees to online payment services and banks, but with Bitcoins, this is negligible. Find out more about how bitcoins are also traded successfully. This is an innovative feature that is likely to make this cryptocurrency popular in the future.
Use of Bitcoins can improve financial services as long as transaction costs are maintained low and speeds are faster. At the same time, there are some inherent drawbacks. For instance, in the instance of an unlikely fraud, transactions become irreversible if they have already been validated once. The good thing is that consumer protection measures should become accessible in the future since many new applications will start using the blockchain technology. An example can be seen in the fact that many companies are making it simpler for merchants today to use Bitcoins in transactions, offering them conversion in USD for a much lower fee. This may be a positive thing for the financial industry and banks. One can hope that Bitcoin’s infrastructure will act as a platform for insurance and equity markets and banking products.