For a few years now, the word Bitcoin has been repeated on many websites and everything related to it has become news. The same thing is happening more recently with the term Blockchain. It seems to be something that a lot of people talk about, but what do these concepts really mean?
The Internet has changed many aspects of our daily lives. In addition to keeping us hooked on social networks and being informed in real time (among many other things), the network of networks has made us even more consumerist. Internet purchases have grown enormously, and Spain has become the fourth country in the European Union in the ranking of online sales. If e-commerce has grown so much, and cash is not used for it, why not create a virtual currency?
What is Bitcoin?
You know what the euro is, right? Well Bitcoin is the same but virtual. It is an electronic currency that is used to buy goods and services. And now comes the big difference with the money that we all know: there is no body that controls its production. There is no Central Bank, it is the people and companies that produce this cryptocurrency.
As with other currencies, you can buy them with euros, dollars or any other currency, but bitcoin does not belong to any country, it can be used anywhere in the world. Transactions with bitcoin are more secure since it is not necessary to reveal personal data, unlike online payments with debit or credit cards. The money belongs entirely to its owner and no one can access it or freeze the accounts. Furthermore, exchanges are carried out from person to person, without any intermediary. And best of all: it cannot be faked. Since it is under a sophisticated cryptographic system.
However, all that glitters with these coins is not gold. As they are not widespread, there is no guarantee that you will be able to use them to purchase any product or service. Although in Spain there are quite a few establishments that accept payment with bitcoin, it has not spread too much. Another disadvantage is anonymity. By not knowing who makes the transactions, there is a risk that the currency will be used for illegal activities or to avoid paying taxes. And the lack of a regulatory body can also become a point against, since it can generate distrust. This also causes the value of the currency to suffer sudden changes at any time, since supply and demand are not controlled either.
How does Bitcoin work?
There are several ways to use this electronic currency. The simplest of them is similar to a virtual wallet. That is, money is purchased and stored in a wallet on a computer or mobile phone. From there, an address is generated that is given to the other user when they want to make a transaction and it changes with each movement of bitcoin. But, in addition, there are more ways to use it, such as mining or blockchain.
What is Blockchain?
The blockchain is closely related to bitcoin, although it is not the only thing that can be related to this new term. The translation into Spanish is block chain and is presented as the authentic revolution of exchanges, whether economic, purchases or files of any type.
The main characteristic of the blockchain is the omission of any type of intermediary in a virtual transaction. But for this to work, it is necessary for someone to “approve” the exchanges in order to avoid fraud. But in this case, it is the users themselves who form the chain who take control of everything. That is, each of the members of the network (there may be thousands or millions) has the same amount of information about the other users. They are all part of a large database or, if we talk about money, an accounting book. In this way, everyone is a participant and manager, but maintaining anonymity. And if everyone can access and verify the same information, there is no margin for error, the data is one hundred percent correct.
How does Blockchain work?
Its operation is relatively simple. If a user (a node) wants to send bitcoin to another (another node), they must make a transaction (block). But for the transfer to be completed, the other members of the chain must verify that the first user actually has the amount they want to transfer and authorize the movement. Once everything is good, the transaction becomes part of the big ledger.
That’s the easy part. However, when a book is completed, a more complex process called mining begins. That’s where business is really done. And with the great increase in the value of bitcoin there are people who have managed to earn millions in currencies such as the euro or the dollar by selling their electronic currencies.
Of course, bitcoin is not the only transaction that can be carried out with this system, it could be applied to any area other than the economy. At the moment, this whole blockchain thing is an idea that is developing, although its generalization cannot be ruled out in a few years.
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