There are a lot of ways in which Bitcoin is different from any traditional currency, and which make the Bitcoin technology so interesting.
- Fully digital – Bitcoin has no physical appearance, it’s recorded electronically but doesn’t exist in any tangible form.
- Decentralised – Bitcoin is not owned by a bank or government, or by anyone! While individual people can buy and hold Bitcoins (or parts of a Bitcoin), the network that runs the currency is controlled by the community that use it, and not by any individual or organisation.
- Private – instead of using a bank account of credit card that has your name on it, if you want to buy something with bitcoin you don’t need to disclose any personal details. It’s not completely anonymous though, as all transactions are recorded and can be traced. However, you don’t have to link your name to your transaction.
- Global – it’s as easy to send Bitcoin to your neighbour as it is to send it across the world. And there’s no extra cost for going across borders.
- Trustworthy – you cannot make a fake bitcoin, put through a false transaction, or steal a bitcoin that is stored securely. The Bitcoin network has built in checks that make it impossible to cheat. Of course, there are always vulnerabilities through things like social engineering (e.g. if someone persuades you to tell them your private key) or if an exchange gets hacked, but the Bitcoin system itself is faultless.
As well as these great features, Bitcoin also has its downsides, which other currencies seek to address.
Stay tuned for our series explaining Ripple, IOTA, Ethereum and more!