Bitcoin as is known to people is a cryptocurrency that came into use as an accidental felony that was the result of a recession of 2008. When the central and other financial authority failed to perform their duties as a result of the financial crisis of 2008, an anonymous personality or rather a group as per the information, Satoshi Nakamoto brought into the notice of public an electronic form of currency with certain uncompilable features with any other currency in existence.
It has got that potential in its operation and working that empowers it to eliminate the mediators involved in making a monetary transaction in the traditional banking system. Bitcoin is based on a peer-to-peer network that forms consensus between the parties to a blockchain. Blockchain is the most important phenomenon in the working of any cryptocurrency. It allows a distributed ledger to form a consensus between them and there exists no third-party involvement and ownership under this mechanism. Everything is available on the blockchain, which has formed multiple blocks for storing different types of information. The information stored related to the different hashes and transactional history. Further, the usage of cryptographic features provides utmost security and encrypts the data in a way making it immune from online frauds. If you want to know more about bitcoin trading, then you can visit the Official Website.
DISCUSSING THE WORKING OF CENTRAL BANKS
Each country has its central bank that looks after the entire financial working of a country. Right from the currency formation to circulating it through government and private institutions, the central bank possesses a monopoly over the currency. The idea of central bank formation has its roots in the British times, who formed the central bank so they help in stabilizing the financial infrastructure of a country. Another main reason for its formation was that banks form monetary policies so that it allows in its ambit multiple disciplinary approaches that ease the financial structure of a country. This monetary policy may empower the central banks to look for the things mentioned below:
1. To look after the country’s overall payment system including the issuance, minting, entrusting it to the public for different lending purposes.
2. To maintain the financial structure during times of crisis to control inflation and other practices destabilizing the financial system.
3. It is also empowered to generate employment to reduce the unemployment rate in the various banks through various processes.
4. It is also empowered to stabilize prices in the financial system so that it reduces the practices of increasing inflation.
5. It ensures the security of the country’s banking system and also maintains the proper working through various means.
HOW BITCOIN CAM DEMOLISH THE CENTRAL BANKING SYSTEM
Bitcoin does have the potential of wiping the existence of central banks and the other intermediaries by the application and inclusion of the following mechanism:
a). As Bitcoin vanishes any central control and mediators over its trading there is no need to have any central authority to look after its workings.
b). There exists a distributed ledger that enables the consensus between all the nodes to verify and validate the transaction.
c). Blockchain technology is also another feature that does not allow any central working mechanism.
d). Cryptographic technology is also one most important feature that does not involve any third party to allow these transactional encryptions.
Hence, we can conclude that the technology used in Bitcoin does possess the audacity of wiping the working of any central authority if applied in the physical world for banking purposes. It will reduce the expenses of so many things to enforce a transaction. If it is applied with due caution in the existing system, it will provide profitable fruits.