Bitcoin can be used as an electronic payment method. At this level, it is a bit like the traditional US dollar, euro and Japanese yen, because these can also be traded electronically, but it is still very different from the traditional Legal currency.
- Decentralization
The most important feature of Bitcoin is decentralization. There is no single organization to control Bitcoin network. It is maintained by a group of engineer volunteers and runs on the global open dedicated computers, which attracts those who are dissatisfied with the full control of banks or government agencies over their money.
Bitcoin solves the “secondary use problem” of electronic currency (because general electronic assets are easy to be copied and reused), and it is through an original cryptography and economic incentive mechanism.
In the traditional electronic legal currency, this function is realized by the bank, which gives the bank absolute control in the traditional financial system.
However, through Bitcoin, the integrity of transactions is maintained by a distributed open network that does not belong to anyone, and no one has absolute control.
Limited supply
Legal currency, such as US dollar, euro, Japanese yen, etc., the central bank can issue any number of currencies, and also try to control the exchange rate of one currency to another. The holders of currencies, especially citizens who have no other choice, need to bear this risk.
For Bitcoin, its supply is strictly controlled according to the underlying algorithm. A small amount of new Bitcoin is generated every hour, and it will be generated at a gradually reduced rate until the total number reaches 21 million.
Moreover, due to the limited number of Bitcoin, it will not be issued at will. Bitcoin has a high holding value.
- Constancy
Unlike the electronic Legal currency, the transaction of Bitcoin is irrevocable. If the transaction is recorded on the network and has passed for an hour, it can’t be changed.
Although this situation may upset some people, it also means that no transaction on the Bitcoin network can be tampered with.
- Anonymity
The identity of traditional electronic payment initiators is generally identified, to cooperate with anti money laundering laws and other regulations. However, Bitcoin users are semi anonymous in theory, because there is no authentication center, and Bitcoin users do not need to prove their identity when transferring.
In practice, each user is identified by the address of the wallet, and the transaction can be traced in this way.
- Separability
The smallest Bitcoin unit is called Cong, which is one hundred million times of a Bitcoin. It can support Bitcoin to do micro transactions that traditional electronic currencies cannot.
But the value of Bitcoin depends on how many people, goods and services are willing to accept this payment. If the number of people in accepting Bitcoin increases, the market will further flourish, and Bitcoin will have a huge appreciation space. If the number of Bitcoin users decreases, its value is likely to decline.