The Great Recession of 2007-2009 was the longest recession since World War II and perhaps the most terrible since the Great Depression. The Financial crisis began with the housing bubble in 2006, led to recession in the USA, and shook the world’s markets in 2009. There were many factors that caused the global crisis. However, banks and centralised financial institutions were the primary cause of the worst economic disaster. Deregulation in the financial industry permitted banks to engage in hedge funding trading with derivatives. To support the profitable sale of these derivatives banks then started to make risky home loans and demanded more mortgages. Therefore they created interest-only loans that became affordable to sub-prime borrowers. Then banks speculated on these overvalued and overrated assets that eventually led to instability of global financial markets.
It seems like the only way to prevent this from happening again was to move away from the centralised institutions. In the past, there were many unsuccessful attempts to do that until Satoshi Nakamoto introduced Bitcoin to the whole world.
What is Bitcoin?
Bitcoin is a peer-to-peer innovative payment network so there is no central authority. It is a secure and trusted new money system of the future. Bitcoin makes it easy to send real money quickly to anywhere in the world. You can also use this digital currency to make small purchases with variety of online retailers, pay for property, hotels, flights, jewellery, Apple apps, services such as university degree fees. Giant companies like Microsoft and Dell accept payments in Bitcoin for a variety of their products and digital content.
How does Bitcoin works?
Since Bitcoin is a decentralised virtual digital currency, there are no physical bitcoins and you simply cannot see or print them. Bitcoin is represented by the record of its transactions between different addresses and the balances, which are both kept on a public ledger in the network. Addresses consist of randomly generated sequences of letters and numbers linked through the mathematical encryption algorithm that was used to create them. They are often called public or private “keys”. The public key, comparable to a bank account number, serves as the address, which is published to the world and to which others may send digital currency. The private key, comparable to an ATM PIN, is meant to be kept in secret, and only used to authorise transactions.
Bitcoins do not carry any personal identifying information such as names or physical addresses. They are broken down to eight decimal places, and this smallest unit is referred to as a ‘satoshi’. The best way to explain this is that bitcoins are like dollars and satoshis are like cents.