Bitcoin for dummies!

The whole world seems to be talking about bitcoin. Some say it means loads of money, some say it’s a currency, others say it’s a bubble but in the midst of all the chaos, it sure sounds like Bitcoin is getting all the attention it deserves & more!

Let me try to explain bitcoin is the simplest terms possible. Bitcoin is a peer to peer cash system which means direct transference of cash from one peer (read person) to another(person) over the internet. Now think of how would you ideally send money to your sister who’s sitting in another city or country and she needs help?

Let me guess! Maybe through a bank transfer, or western union or paypal or a payment gateway or visa or mastercard maybe through any other system that is directly or indirectly offered by a bank. There is no other way currently to transfer money directly without taking the help of a third party like a bank.

Bitcoin, instead is a cash system through which you can buy bitcoins through your local exchange in A country using your own local currency, send them through the exchange to the digital wallet of your sister in B country. She then can withdraw the money by selling those bitcoins on her local exchange instantly giving her equal amount of local currency of her country. All this happens within a few minutes with minimal transaction fee.

Wow! If that’s so simple why is there so much diverse opinion on bitcoin’s usability? Unfortunately, the banks & governments of the world have gotten used to the fact that all money should or must flow through channels controlled by them. It helps them ensure they are in control of the national borders and any illicit activity can be tapped into. This direct transference of money poses a threat to that control since Bitcoin transactions are not only peer to peer but they are anonymous too.

Other aspects of Bitcoin like decentralisation further make it difficult to be controlled by the governments and its use is certainly challenging the position of banks in the economic system and hence there is a whole world who is only waiting for it to crash. That will happen or not only time will tell but for now, we are for sure witnessing the biggest economic revolution of all times and one needs to be open & receptive to change to be able to enjoy this one!