{"id":277,"date":"2014-05-12T20:00:00","date_gmt":"2014-05-12T20:00:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/what-is-bitcoin-and-how-can-change-world\/"},"modified":"2014-05-12T20:00:00","modified_gmt":"2014-05-12T20:00:00","slug":"what-is-bitcoin-and-how-can-change-world","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2014\/05\/what-is-bitcoin-and-how-can-change-world.html","title":{"rendered":"What is Bitcoin and how can it change the world?"},"content":{"rendered":"
\n<\/div>\n
\n(Virgin<\/a>) When you type a website
\naddress into a browser you might have noticed that the letters ‘http’ appear at
\nthe front. ‘Http’ stands for Hypertext Transfer Protocol. In typing a web
\naddress you are actually sending an HTTP command to transmit that website to
\nyou. Hypertext Transfer Protocol is the means by which information is shared
\nacross the Web.<\/div>\n
\n<\/div>\n
\nSimilarly, when setting up
\nan email account, you might have noticed the letters ‘smtp’ – for example,
\n‘smtp.gmail.com.’ SMTP stands for Simple Mail Transfer Protocol. SMTP is the protocol
\nby which we send emails to each other.<\/div>\n
\n<\/div>\n
\nA protocol is the means by
\nwhich information is shared across a network. Bitcoin – with a capital ‘B’
\n– is another protocol. The function of the protocol is to send and receive
\npayment. The unit of money on the protocol is the ‘bitcoin’ – with a small
\n‘b’.<\/div>\n
\n<\/div>\n
\nYou earn a bitcoin by
\ndoing or selling something in exchange for bitcoins \u2013 just as you would earn
\nnormal money. If I do this job for you, you pay me in bitcoins. You buy
\nbitcoins just as you would buy and sell foreign currency. You pay some money to
\nsomeone, usually at a Bitcoin exchange, for which you receive some
\nbitcoins. And you can make your own bitcoins by mining them – more on that
\nanother day.<\/div>\n
\n<\/div>\n\n\n\n\n
\"\"<\/td>\n<\/tr>\n
Image from gettyimages<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
<\/div>\n
\n<\/div>\n
\nYou keep your bitcoins in
\na wallet. There are hundreds of places to get a wallet, just as there are
\nhundreds of places to get an email account (blockchain.info is as good a place
\nto start as anywhere). Often people will have more than one wallet – one on
\ntheir computer, another with a Bitcoin service provider.<\/div>\n
\n<\/div>\n
\nSo how can Bitcoin change
\nthe world?<\/div>\n
\nThe reason the Bitcoin
\ntechnology is potentially so disruptive and transformative is that it’s a new,
\nefficient form of money. And money, which has been, inexplicably, ignored by
\nmainstream economists for so long, is, of course, at the heart of almost
\neverything we do. Bitcoin could change the way the way we make and receive
\npayment, it could change the way we store money; it even has the potential to
\nchange the actual money we use.<\/div>\n
\n<\/div>\n
\nThink about the
\npossibilities of that for a second. We no longer need banks to store our
\nmoney – we store it on our computer with a Bitcoin service provider. We no
\nlonger need banking networks to send or receive money – we just send money as
\nwe would send an email. We no longer need governments to issue our money.
\nForget pounds and dollars, we’ll use bitcoins instead. The social implications
\nof governments and banks losing control of money are considerable. This is
\nall very well in theory. What will make Bitcoin irresistible in practice is its
\nsheer efficiency.<\/div>\n
\n<\/div>\n
\nGoldman Sachs IT analyst,
\nRoman Leal, has calculated the savings that Bitcoin could have made in
\nelectronic payment in 2013, if Bitcoin had been used. Let\u2019s start with simple
\nmoney transfer – sending money from one person to another.<\/div>\n
\n<\/div>\n
\nConsumers currently pay a
\nfee of about 10% of the total amount transferred if they use a traditional
\nmoney transfer network such as Western Union. This fee covers agents\u2019
\ncommissions, forex and access to the network. With Bitcoin, that fee would be
\nzero \u2013 or 1% if you use a Bitcoin service provider. There
\nwere $550 billion of remittances in 2013 generating $49 billion of transaction
\nfees. With Bitcoin those fees fall by 90% to just $5.5 billion. That would
\nmean an extra $43 billion actually makes it into people\u2019s pockets.<\/div>\n
\n<\/div>\n\n\n\n\n
\"\"<\/td>\n<\/tr>\n
Image from gettyimages<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\n <\/div>\n
\n<\/div>\n
\nAs for electronic payments
\nin retail, currently retailers pay from about 2.5% to 3% in fees. In 2013,
\nglobal transaction fees were $260 billion on over $10 trillion of sales. Had
\nBitcoin been used (again using a 1% estimated figure) the number would be $104
\nbillion \u2013 a saving of almost $150 billion.<\/div>\n
\n<\/div>\n
\nLeal notes that all
\n\u2018merchants would realize sizable savings\u2019 by using Bitcoin, but small merchants
\nwill benefit most. They \u2018can reduce their payment processing fees by at least
\nhalf\u2019. For a business that runs on low margin that is a compelling
\nnumber. These kinds of savings are irresistible.<\/div>\n
\n
<\/a><\/div>\n
\nThen there are those who
\nare currently shut out of the current financial system. 53% of the world’s
\npopulation is still ‘unbanked’ – they have no use of formal or semi-formal
\nfinancial services. Most of them will have a mobile phone before they have a
\nbank account. With Bitcoin – and other forms of digital payment – these people suddenly
\nhave means to make and receive payment over distance. How much untapped
\npotential is there waiting to be freed when the unbanked start to get access to
\nbasic financial services?<\/div>\n
\n<\/div>\n
\nWe’re not there yet<\/div>\n
\nThe core protocol of
\nBitcoin is sound. In fact, it has unprecedented reliability and security. The
\nedges, however, are vulnerable. Third parties, such as Mt. Gox, have not
\nfigured out how to act like proper financial institutions. Certain operating
\nsystems using the protocol are insecure, rendering bitcoins vulnerable to
\ntheft. There are also issues with programmers who have failed to understand how
\nthe blockchain – the Bitcoin central database – works.<\/div>\n
\n<\/div>\n
\nBut these are all issues
\nthat will be dealt with as the technology develops. The point is the core
\nprotocol is sound. It – or some replication of it – could send banks to the
\nsame forgotten part of town that the Internet has sent newspapers, as well as
\nfreeing up the possibility for many millions of people to better their lot
\nthrough trade and exchange.<\/div>\n

Open your free digital wallet here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n","protected":false},"excerpt":{"rendered":"

(Virgin) When you type a website address into a browser you might have noticed that the letters ‘http’ appear at the front. ‘Http’ stands for Hypertext Transfer Protocol. In typing a web address you are actually sending an HTTP command to transmit that website to you. 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