Question

1. Talk about Bitcoins, how does it work in terms of blockchain.
2. The cons and pros of bitcoins.

Answer 1

Step 1: Working of Bitcoins in terms of blockchain-
When Bitcoin is installed on your computer or mobile phone then firstly you need to generate your first bitcoin address and another address can be created as per your need. You have to disclose the address to your friends so that they can pay you or vice versa. A bitcoin address can be used only once.
The entire Bitcoin network relies upon the blockchain which is a shared public ledger. Blockchain includes all confirmed transactions. Bitcoin wallets are allowed to calculate their suspendable balance so that they can verify new transactions by ensuring they're actually owned by the spender. Cryptography enforces the integrity and the chronological order of blockchain.
Step 2: Pros and cons of Bitcoins:
Pros of Bitcoin are -
i). The liquidity of the bitcoin is greater than its peers. Users are allowed to retain their inherent value while converting into fiat currencies.
ii). Bitcoin transactions crossing international borders are not different from the bitcoin transactions that stay in the country.
iii). Bitcoin has lower transaction fees as compared to other digital payment methods like credit cards and PayPal.
iv). Any physical items can be bought by using Bitcoin as it is accepted by hundreds of merchants.

Cons of Bitcoin-
i). Bitcoin is attractive for criminals and gray market participants.
ii). There is a lack of chargebacks or refunds unlike other credit card companies and traditional online payment processors.
iii). Vast amounts of electricity are consumed by bitcoin mining.
iv). A host of successor cryptocurrencies are spawned by bitcoins.