When we talk about Bitcoin, it is useful to distinguish between two things: the Bitcoin network with underlying technology (blockchain) and the means of payment (bitcoins). We'll go into more detail later on the technology behind Bitcoin, but first we will limit ourselves to paying with Bitcoin: these are digital “coins” that are sent over the network in transactions and have a certain value. Bitcoins can be used to make digital payments without having to go through a bank or other company. You can think of it as a kind of digital money. However, it is not yet officially recognized as a currency in the Netherlands.
Pay with Bitcoin
Sending and receiving a payment is as easy as sending an email, except you are not sending bitcoins to an email address, but using a bitcoin address - a series of numbers and letters - over the bitcoin network. It is a decentralized peer-to-peer network similar to Bittorrent. Thus, the network spreads all over the world; everyone can participate. Payments are stored on the Bitcoin network in a large, publicly accessible transaction log. How many bitcoins are owned, what bitcoin address is listed in this log so that the whole network agrees on all bitcoin balances. The "keys" with which you can spend your bitcoins are stored locally in the application on your phone or computer. Thus, you yourself control access to your bitcoins: you are your own bank.
Due to its decentralized nature, proven mathematical principles (cryptography) and the large computing power on the network, Bitcoin offers an extremely reliable means of payment that is very suitable for both small and large payments. It is open source, so anyone can control it and no one can stop it. Other benefits include: Anonymity (public transactions, but basically it's up to you if the transaction / address can be traced back to you.) Relatively low transaction costs, especially for international transactions Worldwide payments and almost instant * Payments are irreversible
Unfortunately, Bitcoin not only has advantages, but it also has its own decentralized nature. Bitcoin, for example, requires a lot of user responsibility, decision making is difficult, mining is energy intensive, and a decentralized storage method, while secure, is not very efficient. Therefore, bitcoin is too expensive for high transaction volumes and micropayments. Fortunately, we are working hard on smart solutions that will make Bitcoin more scalable. * Bitcoins usually arrive at the recipient within a second, but it will take about an hour before you can assume that the transaction is final. It has to do with the blockchain in which the transaction must be included. We will explain this later.