Bitcoin transaction, how does it take place ? and How secure is it ?
What if there’s a technological development so powerful that it transforms the basic pillars of our society.
A technology which fundamentally influences the way our economy government systems business functions and could change our conceptual understanding of trade ownership and trust.
This technology already exists and called Cryptocurrency.
People think of bitcoins as only virtual money or transnational systems.
But if you will look closer, you will see that the monetary aspect is just the tip of the iceberg. That’s because bitcoin is a ground breaking internet tech for which money is merely one of the possible application.
Money exists to facilitate trade. Through the centuries, trade have become extremely complex, everyone traded with everyone worldwide. Trade is recorded in book keeping and this info is often isolated and enclosed to the public and for this reason we use third parties and middlemen we trust to facilitate and improve our Bitcoin transaction.
Bitcoin transaction are safe and secure
Think of government banks accounts, notaries and paper-money in your bitcoin wallet, we call these trusted third parties. Now this brings to essence of bitcoins:
Bitcoins enables a network of computers to maintain a collective bookkeeping via the internet. This bookkeeping is neither closed nor in control of one party, rather public and available in one ledger which is fully distributed across the network. We call this the Block Chain.
BLOCKCHAIN – SOURCE OF TRUTH
In the blockChain, all transitions are logged including the information on the time, date, participant and amount of every single transaction. Each node in the network owns the full copy of a block chain, on the basis of complicated state-of-the-art maths principle the transactions are verified by bitcoins miner who maintains ledger. The mathematical principle also ensures that these nodes automatically and continuously agree about the current state of the ledger and every transaction in it. If anyone attempts to corrupt the transaction, the node won’t arrive at a consensus and hence will refuse to incorporate the transaction in the block chain. So every transaction is public and 100s of nodes unanimously agree that a transaction has occurred on date X and at time Y. It’s almost like a notary present at every transaction, this way everyone has access to shared single source of truth.
This is why we can always trust the block chain.
The ledger doesn’t care whether the bitcoin represents certain amounts of Euros or Dollars or anything else of value or property. Users can decide for themselves what a unit of bitcoin represents A bitcoin is divisible in 100 million units and each unit is individually identifiable and programmable
this means that users can assign properties to each unit. Users can program units to represent an eurocent, or share in a company, a kWh energy and a digital cert of ownership
Because of this a bitcoin is much more than money and payments. A bitcoin can represent many properties, a 100 Euros of oil, award credits or a vote during elections for example.
Make our currency smart with Bitcoin transaction
Moreover bitcoin allows us to make our currency smarter, and to automate our cash and money flow. Imagine a healthcare allowance in dollars or Euros that can only be used to pay for health care at certified parties. In this case whether someone actually follows the rule is no longer verified in the bureaucratic process afterwards. So you simply program these rules into the money, ergo COMPLIANCY UPFRONT.
Bitcoin transaction saves time and labour
The unit can even be programmed in such a way that it automatically return to the provider if the receiver doesn’t use it after a certain amount of time. This way the provider can ensure that the allowances are not hoarded. A company can control its spending in the same way; by programming budgets for salaries, machinery and materials, and maintenance so that the respective money is specifies and cannot be spent on other things. Atomizing such matters leads to considerable decrease in bureaucracy which saves the accountant, controllers and the organization an incredible amount of time.
But there’s more.
In an internet of things, our economy will be actively dealing with machines that actively participate in the economic traffic. In fact they are already here: Think of a vending machine or drones, delivering packages. These machines are unfamiliar with the concept of trust but Bitcoin is not. Because of a bitcoin, the drone will be hundred percent sure that the drone will deliver the package to the right recipient and know for sure that it’s been paid for. And we program the vending machine in such a way that it will automatically keep track of its supplies, order new supply from the supplier and pay for them automatically.
Of course you will understand that Bitcoin transaction is only the beginning, Internet Technology is disruptive, and breaks the status quo, it opens markets and breaks the position of middlemen all the time.
Bitcoin and Cryptocurrencies have caused a paradigm shift, its time to explore this new technology constructively and critically and openly discuss potential applications.