What is Bitcoin?When people say “Bitcoin” they are referring to one of two things.
1. A digital/crypto currency.
2. A payment system used for sending and receiving money online.
Bitcoin as a Currency Bitcoin is a digital, decentralized, peer to peer, pseudonymous currency based on cryptography. If that sentence made no sense to you, don’t worry – I’ll break it down for you.
· Digital – Bitcoins exist only as code, they do not exist as anything physical. People can (and have) made physical representations of Bitcoin, but ultimately they are based in the digital world.
· Decentralized – There is no central bank or institution that issues or controls Bitcoin. It is a group of individuals all over the world who run the program that keeps the monetary system running.
· Peer to Peer – You control your own Bitcoin, and when you send Bitcoin to someone else, it goes directly to them. There are no banks or middlemen.
· Pseudonymous – While all Bitcoin transactions are publicly view-able in an open ledger called the Blockchain (we’ll get to that later), the sender and receiver are only known as a string of numbers and letters. If you’re careful about your identity, using Bitcoins can be done anonymously.
· Based on Cryptography – The strength of Bitcoin as a digital currency lies in the code, which uses strong cryptography to ensure that the coins cannot be accessed without proper permission. Bitcoin is the first digital currency that has these characteristics, and as a result it is the first digital currency to become widely adopted on the internet. As of June 2013, it is handling nearly 60,000 transactions each day, and this number is accelerating quickly.
Why Use Bitcoin in Pakistan:
Bitcoin is Big news for Internationale buyers and sellers. It is no secret to Bitcoin users that digital currency makes PayPal’s model of online transaction look somewhat archaic by comparison. While the method was the darling of the online community in years gone by, the rapid advance of Bitcoin in particular has caused PayPal to come increasingly under the spotlight recently.
10. Lower Fees
This is usually the first advantage of cryptocurrencies that you hear from Bitcoin enthusiasts and experts. And this is certainly true as PayPal has been notorious for imposing hefty transaction fees on users of about 3%.
9. Community Support
You can also think of Bitcoin like an app on the Bitcoin network. This means that the protocol, add-ons, and supporting infrastructure can always be further developed and improved to suit the needs of consumers and all users.
PayPal was not constructed with this in mind and has a considerably narrower potential field of operation. In other words, while PayPal can certainly afford to pay its own team of talented programmers, it still will not be able to innovate at the same rate as a decentralized network of developers spread across the entire world.
PayPal is not available in every country with notable exceptions being Iran, Afghanistan, North Korea, and Haiti.
Bitcoin on the other hand is the first true transnational currency because it is border-agnostic like the Internet. In other words, it can be controlled to an extent on a very local level but cannot be shut down globally unless electricity is shut off everywhere in the world.
Unlike PayPal, Bitcoin can offer citizens living under oppressive regime a way out. People using this border-less currency can circumvent state supported financial monopolies and establish their own local economies.
With Bitcoin, it doesn’t matter whether you send 1 cent or 1 billion’s worth, the transactions fee is the same (approx. US$0.02) or btc 0.0001. And since it’s actually your money, it is only logical that you should decide on the amount you want to send.
The decentralized nature of Bitcoin means that there is no single clearing house monitoring and controlling the network. This ‘trust-less’ payment system greatly increases the security of a network as there is no single point of failure such as from a DNS attack, for example.
To use PayPal, you must be online and have a credit card. In contrast, Bitcoin can be sent offline via email or even SMS on a Nokia dumb-phone.
While Bitcoin is not truly anonymous, it can still provide a certain level of anonymity or pseudo-anonymity for users if they know how to cover their tracks and manage their digital wallets – a process that is expected to become more user-friendly with time. Additionally when using bitcoin you can pay directly to the receiver without providing any data hence safe guarding you towards future hacks on the site that you are paying.
In contrast, this is impossible for PayPal users as they are required go through the burdensome process of filling out long forms to prove where the money came from and what it will be used for. This is particularly true for international users.
This is the overall most important point that cannot be stressed enough. Bitcoin lowers the barriers for all to participate in global commerce.
While this may seem trivial at first, consider that almost 2.5 billion people on this planet do not have bank accounts and thus, cannot use PayPal. Bitcoin has the potential to finally bring almost half of the world that is unbanked into the global economy, which can then be truly called Global.
Indeed, with Bitcoin, a local farmer in Tanzania can receive bitcoins on his mobile phone with the nearest bank or western union location being a hundred miles away. He is also able to send payments and be an active participant in the global economy. The same holds true for Pakistan. The masses have seen the success in high cost money transmitters such as easypaisa, mobicash, ubl omni or upaisa etc. Bitcoin can be the source of a cheaper solution to all if accepted by masses.
Thus, Bitcoin enables true globalization that is inherently inclusive and egalitarian, although how this technology is implemented is ultimately up to us – the users.