THE BITCOIN PROJECT (2)
Last week, we explained some frequently used terminologies in the cryptocurrency in its simplicity. The article examined the basic ideas and concept of cryptocurrency. It also answered questions related to cryptocurrency underlying technology ” the blockchain” as well as other BITCOIN projects.
In this new article, excerpt from BITCOIN white paper is examined so as to identify its project benefits related to the world fiat currencies.
But first let’s us identify major differences between Banks and Cryptocurrency operations and policies.
Cryptocurrency does not need trusted third parties to process its transactions as Banks and Credit Card companies do.
The traditional method (Banks etc) may work for most transactions but problems do occur when financial institutions facilitate the buying and selling of goods on the internet.
Here are some of the weaknesses of traditional electronic payments involving third parties:
1) Transactions can be reversed since banks must mediate disputes that inevitably arise.
N.B: Think of disputes that routinely take place between merchants, consumers and other parties, such as payment processors, PayPal or tax authorities.
2) Banks’ intervention (i.e., mediation) increases transaction costs and this also limits the minimum practical transaction size. The reversibility of transactions becomes a problem when a provider has delivered non-reversible services.
N.B: Consumers frequently buy low-cost items on the web, such as $5 keychains and $10 eyeglasses. However, bank involvement costs a lot and these costs are passed on to consumers through transaction fees and other charges.
3) The possibility of a transaction’s reversal hangs over everyone. And that requires people to trust a third party such as banks to resolve payment disputes.
N.B: Transactions are frequently hacked, and these financial institutions often give too much information about clients or customers to the government without informing the affected party. All this also create privacy concerns.
Next week we shall examine how Cryptocurrency/Cryptography intends to solve all these irregularities in traditional institutions’ processes and policies.
Let us know what you think in the comments box below.
At Altecho Trading and Exchange Limited- ATEL, we give you news, opinions, advice and research on Crypto-currency (eCurrency, digital currency), computer/general security issues and the latest internet threats.