Cryptocurrencies and the Future of Finance: Bitcoin

Bitcoin

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What is Bitcoin?

Bitcoin is a type of cryptocurrency which is digital in nature, which means it’s totally virtual and accessible online. It was created in 2009 by Satoshi Nakamoto and is considered as a collection of computers which run its code and is a mode of electric payment. 

Since its development, it has been a source of inspiration for the creation of many other similar cryptocurrency chains which are considered as altcoin systems. Bitcoin is created, distributed, trades and stored using a decentralized ledger system, known as a blockchain.

How does Bitcoin Work?

Understanding Bitcoin can be a little tedious as it is a complex design, however it is not as complicated as one may think. The main idea behind Bitcoin is a blockchain, which is a public digital system that records transactions in many places simultaneously. 

The Bitcoin is stored in digital wallet applications available on computer and smartphone devices. Small installments are allowed to be stored for users with the remainder being stored in offline wallets. This ensures safety from any kind of malware and keeps the user;s wallet secure.

People can send Bitcoin to others via bitcoin wallet to wallet transfer and can also trade them. This is done through a transfer request made by a user’s bitcoin address in a customer’s wallet to the vendor’s bitcoin address. A small fee is charged during each bitcoin transaction which is paid to someone known as a bitcoin miner. 

What is the Relevancy of Crypto Accountancy?

Crypto accounting is the application of accounting and audit principles where evaluation, deploying and using cryptocurrency based public assurance networks. There are three main aspects of building accounting systems. They are

  1. Transparency

A very important pillar of crypto and bitcoin accountants. It allows stakeholders within the system to hold one another accountable. It ensures that there is verification of transactions which gives its users the confidence to trust the system and know that an audit would be available in case of any errors, fraud or dispute.

  1. Redundancy

This ensures immediate action and resolution if there is a prediction of an impending mishap as well as identifying what went wrong after an error has taken place. This tedious job is carried out by accountants and auditors which ensure thorough systematic review allowing users to rely on them for the same.

  1. Tamper Resistance

Both redundancy and tamper resistance tend to coincide with one another in this process since redundancy ensures preventing bad actors from exploiting a transactional history. Tamper resistance however assures users that the amalgamation of the two are not for nothing and that the transactional history stays true to economic reality. 

Cryptocurrency is still a relatively new concept and although transactions can be made and used as a medium of exchange, it cannot yet be considered equivalent to cash currency since it is not readily available to be exchanged for goods and services and as a result, are not widely accepted as a legal tender. There is still a long way to go but the future is certainly digital money.

Read Also: 3 Top Easy Ways to Mine Bitcoins