Have you ever wondered what the brutal truth about Bitcoin and Blockchain is? What is the essential thing you need to know about one of the most popular technologies and digital currency? If you are among devoted crypto enthusiasts eager to find all the crucial information about Bitcoin from first-hand professionals, you will learn the brutal truth about Bitcoin.
Since its first appearance back in 2009, Bitcoin has been on an incredibly wild ride. Back in 2021, the price of one Bitcoin has managed to climb up to the incredible amount of $60,000. This is truly an outstanding value in just 12 months straight.
However, before we proceed with the brutal truth about Bitcoin and all the brutal truth about Blockchain technology, it is essential to get to know all the crucial information about it as a newbie in the crypto universe. So, let’s start with the basics of Bitcoin and Blockchain, shall we?
Bitcoin and Blockchain Technology – Fiercely Explained
Bitcoin is one of the essential digital currencies with a decentralized nature that functions without a third-party, such as banks, governments, or a single administrator. It functions on an open distributed ledger without any intermediaries, and it is able to be sent from one particular user to another on a peer-to-peer network basis.
Through cryptography. All transactions on Blockchain technology are verified network nodes and recorded in Blockchain, a public distributed ledger created by an anonymous person or a group of people with the name “Satoshi Nakamoto.” They named it “Bitcoin” from two different worlds,” a bit” and “coin.”
It was published in a white paper that was published on October 31, 2008.
The aim was to use them as a reward for crypto mining and exchange them for numerous other currencies, services, or products. With the appearance of Bitcoin in 2009 on the market, the world began using cryptocurrencies. Back then, it was released as open software.
Blockchain technology essentials for beginners
When it comes to Blockchain, you should remember that it operates as an open distributed ledger recording all Bitcoin transactions. What’s interesting about Blockchain technology is that it’s implemented as a chain of blocks, where each block, in particular, contains a hash of the previous block.
Network nodes can validate all transactions. After the validation is done, the next step is adding them to their copy of the ledger and then broadcasting identical ledger additions to all remaining nodes. To accomplish independent verification of the chain of ownership, it’s crucial to understand that every network node stores its copy of Blockchain technology.
On average, every 10 minutes, blocks that are a new group of accepted transactions are created and added to the Blockchain. Without any central oversight requirements, it’s quickly published.
What you Need to Know about Bitcoin
It’s not surprising that there’s been a lot of controversy around Bitcoin ever since it appeared in 2009. The brutal truth about Bitcoin is that people have been criticizing it for its tremendous use in:
The significant amount of electricity
Potential thefts from exchanges
Carbon footprint by cryptocurrency mining
Bitcoin as a speculative bubble
In addition to all that, numerous economists and investors have described Bitcoin as a speculative bubble. What does it mean exactly? To be precise, it means that the value of Bitcoin results from speculation on its potential future value.
Like all currencies that weren’t backed by any precious metals, it is evident that Bitcoin will have value in the long run as long as it’s generally accepted as a store of value and a medium of exchange. Thus, the larger its acceptance, the more it tends to be worth if we consider a particular number of Bitcoins in circulation.
The future acceptance of Bitcoin is an unknown factor
However, the future acceptance of Bitcoin is generally an unknown factor. The volatility of Bitcoin’s value powerfully sends back all changes in the perceived degree of acceptance. For example, when one US Senate stated that “Bitcoin is having a promising future,” the value of Bitcoin soared above $1,000.
On the other hand, when Chinese authorities banned all their banks from processing any Bitcoin payments. As a result, its price collapsed to below $600. What has also affected Bitcoin’s value collapse in Korea and Thailand is their decision to prohibit Bitcoin use in their countries.
Also, some recent attacks by certain Bitcoin exchanges resulted in funds suspensions on three platforms. So, the value fell from $900/BTC to $550/BTC.
Vulnerability to computer theft and a subject to competition
Another brutal truth about Bitcoin is its general vulnerability to computer theft. Compared to all other currencies that are also curators but legal tender, no one is generally forced to accept it.
Also, Bitcoin is an excellent subject to competition from numerous other virtual currencies. This generally means they are becoming essential. According to their progressive rise in the use of social networks and the internet, the proliferation of digital goods, and the larger volume of electronic trade.
All the Good Sides of Bitcoin Cryptocurrency
Nonetheless, there’s also the brutal truth about Bitcoin in a very positive sense. Here are the main advantages of the Bitcoin cryptocurrency that you need to keep in mind:
Bitcoin transactions don’t include banking fees
Transactions for Bitcoin International payments are extremely low since these transactions don’t include any involvement of intermediary institutions.
All Bitcoin transactions are 100% secure and mobile, making stealing them impossible. Private keys for the wallet are what make them secure.
In addition to their security, these transactions are pseudonymous. They’re not 100% anonymous as pseudonymous transactions are only identifiable with multiple addresses and passwords.
The payment system of Bitcoin is entirely peer-to-peer (P2P). Users from all over the world can send and receive payment systems from or to any person on the network. Keep in mind that, according to the P2P network, the parties to a transaction don’t necessarily require approval from any authority or external source unless they are sending or receiving usernames and passwords for one account only.
What is Essential to Know about the Blockchain Technology
Once you’ve realized the brutal truth about Bitcoin and that there can be various “truths” depending on the individual point of view, let’s focus on Blockchain technology. As we’ve learned, it refers to a growing list of records and blocks linked together utilizing cryptography. Managed by a peer-to-peer network, it acts as an open distributed ledger.
However, some facts fall under the “the brutal truth about Blockchain technology” category.
Blockchains are as safe as their weakest link
Even though Blockchain technology appears to be highly safe, that’s not quite the case. Blockchains are only as safe as their weakest link. It means that the device that’s considered the weakest or easiest to hack represents a real threat to the privacy of the whole Blockchain.
Also, it is possible to receive a scam transaction approval. There are specific issues with Proof of Identity consensus algorithms, like manipulating smaller blockchain networks or minorities being sidelined. Keep in mind that it’s way much easier for scammers and fraudsters to enter a Blockchain with different devices. Therefore, allowing them to purchase more votes for themselves. The majority is always able to obtain transaction approval.
Proof of Stake Issues
Proof of Stake concerns all the stakeholders involved in Blockchain technology. If you own most of all the available assets in a Blockchain, you are in complete control. Thus, the weight of your vote is straightforwardly proportional to the stake you hold in a blockchain.
Remember, if one particular group buys more than 50% of all the assets in a blockchain, they are the ones to control it completely.
Scalability and Regulation Issues
Besides its security, there could also be issues with its scalability. Remember, the bigger the Blockchain grows, the more vulnerable it gets to be. What makes it incredibly hard to scale is the redundancy of Blockchains, which means hundreds of copies of the same data.
Massive storage and more power the noods for processing everything is what they require. The brutal truth about Blockchain regarding its regulation is that decentralization of authority means that there is no one power to enforce law and order in the network. Thus, the complete regulation of your Blockchain is merely impossible.
Complete Transparency can also be Problematic
The complete transparency of the Blockchain can also be a bit problematic, and here’s why. For example, once working in a commercial environment, complete transparency allows the participants to see what every member is doing in real-time.
It’s like customers who wouldn’t want all the businesses involved in supply chains getting their data. Businesses wouldn’t want their competitors to get a whiff of their strategies, secrets, or properties.
Advantages of Using Blockchain Technology
Besides all the speculations about Blockchain technology, there are also crucial advantages that you should keep in mind, such as the following ones:
Blockchain creates trust between different entities, especially where trust is either unproven or nonexistent. Thus, entities are eager to engage in business dealings involving data or transactions sharing that, otherwise, they wouldn’t have done or would require an intermediary.
It has a decentralized structure. This means that Blockchain technology proves its real value when the central actor who enables trust is absent. Blockchain enables sharing of data within an ecosystem of businesses where no single entity is entirely in charge.
Security and privacy saw significant improvement. This means that the security of blockchain-enabled systems is another great benefit of this impending technology. Hacking data on Blockchain is nearly impossible.
Thanks to Blockchain’s nature, costs saw a reduction, which cuts them for organizations. Besides creating efficiencies in processing transactions, it also reduces manual tasks such as amending and aggregating data and easing auditing and reporting processes.
The brutal truth about Bitcoin and blockchain technology, in general, is that you can find both advantages and disadvantages based on the point of view. If you focus on all the good sides and try to avoid the negative ones, then this cryptocurrency and its network can provide you with tremendous benefits and success in the long term! Keep up the excellent work and always.
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