Mark Janniro - THe Black Book of Bitcoin: a Step-by-step Bitcoin Guide

E-commerce relies heavily on financial institutions that act as third parties in order to process payments done electronically. Although this system based on a trust-based model works for many transactions that are carried out over the Internet, it has some inherent flaws. For instance that, the transactions are not irreversible nor anonymous, as the financial institutions have to come between the parties involved in a transaction to mediate in case a dispute arises and this greatly increases the cost of the transaction and leaves room for fraud.

The need for a trust-based model arises due to the fact that in the current online model, transactions are reversible and you have to provide your personal data, so there is still a chance of fraud and costs are very high (think Paypal).

You can avoid this costs by carrying transactions using physical currency, however, in case of making an electronic payment; there is a need for a viable mode of exchange. There is the need of an electronic payment system, which instead of relying on a trusted third party operates using cryptographic proof. There is a need to reduce the instances of fraud, which can be achieved by making transactions irreversible and anonymous.

Another concern is the constant misuse of governments and central banks around the world of their local currencies. From hyperinflations to credit bubbles, to all kinds of manipulations, devaluations, capital controls and crazy taxations, we should really find a different way of storing our wealth, away from praying eyes and bureaucrats.

What were talking about here is a new medium of exchange that can replace the traditional currency and make online transactions secure and private and that is Bitcoin; an innovative and novel solution that does not rely on financial institutions and yet is a secure way to carry out transactions.

Bitcoin can be defined as a crypto-currency, which means that the transfer and creation of bitcoin is dependent on an open source cryptographic protocol and does not rely on a central authority. This innovative currency option was introduced in the year 2008 as a peer-to-peer electronic cash system.

If you are wondering how the transfer of bitcoins takes place, it is a fairly simple procedure, and you can transfer them through any smartphone or a computer without a financial institution acting as an intermediary.

Bitcoin is becoming a rage around the world; originally, people supported the concept of bitcoin because they wanted to be a part of a revolutionary idea, however, people soon realized the potential of bitcoin and how it could grow into something huge. As more people began to take an interest in bitcoin, the prices started to inflate and the media attention that it got from its skyrocketing prices resulted in more attention being diverted to bitcoin from around the globe, and it became a mainstream sensation.