Introduction
Our daily activities in life basically involves money, which serves as a medium of exchange for every services we acquire. This money undergoes a medium called transactions since it is actually leaving the hands of one particular person to another. As time passes bye, other parties have become involved in transactions between two or more people.
Third parties are no longer new to us, as they basically handle major parts of our daily transactions today. This third party are not invincible, but are set of institutions that operate on different protocols that suit themselves and not the customers that uses their service.
The issue of third parties and the poor services they offer felt like there wasn't any option to breaking free from their oppression, but thanks to the technology that came to the rescue of man, thereby changing the financial system inorder to suit the taste of the majority. The Blockchain technology is indeed a financial saviour of the mess caused by financial institutions and those who stands as a third party in every financial transaction.
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Blockchain technology didn't just act up on it's own by auto changing the financial situation, but it was a brilliant idea of the name Satoshi Nakamoto, who clearly drafted out the plans and published a white paper which was released in the 2008. The white paper detailed a digital cash popularly known as Bitcoin, which could operate on it's own Blockchain and also serve as a medium of exchange just like other forms of money.
Satoshi's brilliance was extraordinary and life changing for humanity, but sadly, the suppose person wasn't heard from 2years after the white paper was published. No one could actually tell where the name Satoshi Nakamoto currently resides, as his/her whereabout isn't known. Some people's opinion was that Satoshi Nakamoto is actually from the British origin, while others thinks that Satoshi Nakamoto are groups of hackers whose true intentions was to change the financial situation.
Despite not been able to figure out the brain behind this world changing solution, we can see the effect of what has been put in place, and still benefiting from it's magic.
Magic Money
Magic is often used in a case of fairy tale, which makes the story and protocols behind bitcoin sounds more like a magic to us. From the distribution of transactions across every computer, to the mining process and halving is still a phenomenon debate that might be quite confusing but very easy to understand.
Unlike a bank transaction where third party makes the actual transaction, it is totally different in the case of bitcoin. This is an actual example...
If someone chooses to make a transfer to a friend using his/her debit card or banking app, he/she has to input the actual amount and then make a request for the transaction to be done. This transaction doesn't happen immediately because there is a third party standing between the person who is making the request and the person who should be receiving it. If the third party considers the request, they will simply send a notification to the receiver, but won't move the actual money immediately to the banking institution used by the receiver.
And note, the third parties are always in charge of the money, even when it is your deposit.
But Bitcoin is quite different from how the banking service operates. In a bitcoin transaction, the receiver don't just receive a digital copy of the transaction, but also receives the digital money itself, unlike banking institutions that only sends the digital notification to the receiver.
Something interesting about this transaction is that every transactions are recorded in the computer of every users of this technology. In other words, we can say that it is evenly distributed globally.
And another interesting part is that Bitcoin transactions feels more like a teleportation, because it leaves the sender and gets to the receiver in just seconds, though some transactions might delay.
Can we then call this a magic money ?
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Protocols
Every organization and person have a protocol that guides and lead its operation. These protocols contain the positive and negative part since there can't be 100% efficiency.
The protocols of the Bitcoin is open source, which means that the programmed codes are freely available to anyone who chooses to make additions and redistribute. This is just like anyone been able to add new websites to the world wide web, which means programmers can also add values to the Bitcoin.
In the finance industry, there are too basic services that the financial protocol offers, they are: Currencies and Payment Networks. These two services are completely different and they serve different purposes.
Payment Networks are simply financial institutions that offers online transactions in collaboration with our normal banking institutions. Their charges that be very annoying due to its huge fee. Examples of this payment networks are PayPal, Visa and Remittance Providers.
While currencies are types of money that can serve as a medium of exchange. They are both in digital and physical forms which cryptocurrency happens to fall under the digital format. Examples of the currency we are familiar with are Dollar, Pounds, Euro, etc.
It is my pleasure to let you know that Bitcoin basically serve the two purpose that the financial protocol offers. That means Bitcoin can act as both a Payment Network and also as a currency. Is there anything magical than this ?.
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Security
If there is any situation we won't like to find ourselves, is to lose our hard earned money to theft or any other possible financial crisis. One other thing that the digital form of money has taught me lately is that it might reduce the cash robbery.
When it comes to security, the safety of bitcoin is unimaginable due to the protocol that guides it. Unlike the banking institutions, where they choose to keep and have access to all your founds. This has literally raised concern in certain part of the world, where banks are allowed to use the money of their customers for financial losses in the organization.
In the case of bitcoin, the private key gives access to the owner or anyone who gets hold of it. Anyone without the private keys can't access the funds or even hack into it. This is why we say: your keys - your money, not your keys - not your money.
In a case where someone eventually lose his/her private key, maybe due to personal error or any other, then the money is gone as well and can't be possibly recovered again. There is no third party that can help in such situation, except you look for who Satoshi and ask for help in person, which is 100% impossible to find. This strict rule is basically part of how Satoshi Nakamoto defined decentralization.
Though banks can assist their customers in funds recovery, but this process is sometimes not very easy to handle. In other words, we can say that the security of bitcoin is very tight, and it requires us to be 100% careful with our private keys or else, we fall victim.
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Mining
We've sometimes wonder where bitcoin comes from, which is common among those that are new to the crypto verse. Could it be from banks ?, the ground(earth) ? or thin air ?, This might be a possible thought of some people, but let's take a good look at what the author is about to right down...
During transactions of every amount/numbers of bitcoin, new blocks are required to store this transactions. Inorder for new blocks to be created, it requires different individuals who act as miners to create this blocks. Every miner uses powerful computers which contains large numbers of processors that consums large amount of power (electricity).
These computers simply make a guess work in trying to resolve mathematical problems which can basically create the next block necessary for storing transactions. And for every miner that can possibly create a block, gets a reward which happens to be the bitcoin.
Though mining has great rewards that comes with it, but the cost of operation can be mind blowing. There are countries that don't allow the mining of bitcoin due to the large amount of power it consumes, and also the cost of machine parts that performs this operation isn't a fare price.
If you are a miner and you are reading this post, then I must give you a thumbs up for choosing to perform such task, though the crypto verse see you guys differently.
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Halving
Satoshi Nakamoto happened to be very smart due to what halving had to offer. During mining, rewards in form of bitcoin are been offered to miners, but this amount of rewards happens to decrease in every halving season. Example....
During the first season of bitcoin introduction, miners where getting a reward of about 50bitcoin per block. Due to the halving protocol, miners reward reduce by half in every four years, which means the every four years would be 25bitcoin, 12.5bitcoin, 6.25bitcoin, etc.
During halving, the numbers of bitcoin moving into circulation is reduced, which should not be confused for burning where half of the numbers of bitcoin in circulation are been removed and kept in a wallet where the keys are reportedly deleted, so that no one would gain access. Halving and Burning are quite similar but opposite. One is to reduce the amount going into circulation, while the other is to reduce the amount in circulation.
During halving, bitcoin becomes scarce, which increases the interest of miners in creating the next possible block, thereby having effect in the price of bitcoin. This period of price hike is known as bull season to so many, as Bitcoin price sometimes influences the price of other crypto currencies in the market.
According to calculation, all bitcoin must have been mined in 2141, which is about 118years from now. This halving process is just like a radioactive decay process, where disintegration of unstable nucleus occurs. What then would happen after every bitcoin has been mined ?, Well, that should be an assignment to anyone who chooses to find out. I might write a post about it someday, which i am not certain.
How magical is this magic money ?.
If this post interest you, and you wish to tip me some Bitcoin, here is my Bitcoin address: 14FUbgYVqwAR3Ti9ioeoShQXgNfzTDs6gh
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My Opinion And Conclusion
Bitcoin is not just a coin after all, but it serves as a true currency that holds true value and gives the decentralized option that world have been waiting for. What else can be magical than this ?. All thanks to the brain behind this amazing project that has fulfilled so much, even though we don't know and can't possibly identify who Satoshi Nakamoto is.
How magical is this magic money ? is a write up, dedicated to what the Bitcoin truly defines and how it operates. I can bet you that this post is worth reading, so do well to enjoy it.
The write up in this post is clearly base on the knowledge I have gained about Bitcoin related matters, if you feel that your own idea is different, kindly point that out in the comment section.
Thanks for reading my post, if you enjoy what I do, please do well to rehive and follow me for more.
If this post interest you, and you wish to tip me some Bitcoin, here is my Bitcoin address: 14FUbgYVqwAR3Ti9ioeoShQXgNfzTDs6gh
Or you can as well tip me some hive to my hive account @sahidclement99.