Why Bitcoin ATMs are the Future of Banking Part 3

Why Bitcoin ATMs are the Future of Banking Part 3

Advantages of Bitcoin over traditional payment systems. How Bitcoin and blockchains work.

 

Bitcoin ATMs are the future of banking, especially in the developing countries, for a very simple reason. Payment systems such as M-PESA are a proven success. The success of M-PESA is undeniable and when the system became available, millions of people became users in a very short period of time. This can only happen when people are getting a service that they really like, similarly to what has been happening in the United States with services and companies such as Facebook, Google, Apple and Amazon. The main reason people use the products from these companies is that they want to. There is no way to get to millions of users by forcing people to do something.

People use electronic payment systems because users like the convenience of electronic payments and the ability to be able to exchange regular currency into digital money and back.

 

Advantages of Bitcoin versus regular payment systems

These are exactly the capabilities that Bitcoin ATMs could provide them with, and more. The advantage of Bitcoin ATMs and payment systems that could evolve based on the availability of the Bitcoin ATMs is that Bitcoin ATMs have all the advantages of a payment system such as M-PESA, yet they don’t have any disadvantages of the system. Most of these disadvantages have to do with M-PESA and other systems still have to employ or a lot of people or have a wide network of agents. Agents may be independent service providers and independent locations, but they are still run by people.

Compared to this system, a system that uses Bitcoin ATMs would work much more smoothly. The main similarity is that a Bitcoin or some other cryptocurrency wallet is very similar to an existing wallet that so many people have with current payment systems. The first advantage is that once a person gets a Bitcoin wallet or some other cryptocurrency wallet, there is no need to go back between a cryptocurrency and a regular currency back and forth is the friends of the person and most of the locations accept Bitcoins or the other cryptocurrency. Bitcoin ATM will serve as a helpful resource for all those instances where a person needs to pay someone in regular currency or when the person receives a payment in a regular fiat currency and needs to exchange it to Bitcoins.

Once a person converts funds to Bitcoins, the Bitcoin network would simply be recording all the transactions on the blockchain just like it does with all other transactions all over the world. The record keeping of transaction on blockchain is the breakthrough that did not exist before Satoshi Nakamoto launched the Bitcoin network in 2009.

 

How Bitcoin network works

Before Bitcoin, many cryptography and finance experts have been trying to figure out how to create a fully digital system, but couldn’t solve a number of issues that exist around the problem of double spending, which is when a user on a digital financial network sends same funds to several users at a time pretending that the transaction is only occurring once. If you have ever copied a file on a computer, tablet, or some other digital device, you did exactly what creates the problem: copying a file on a digital device is extremely easy. You push a button and can have as many copies of the file as you want. Now suppose you send these copies to multiple people. How can people know that you’ve made the only copy? This was the exact problem that Satoshi Nakamoto solved when he created the Bitcoin network.

 

How blockchain ledgers work

One of the problems with understanding how blockchain technology works is that blockchain is not something you can use directly. On the Bitcoin blockchain, you simply send a payment and the network, while utilizing the blockchain technology, takes care of the rest.

Blockchain is a complex technology and to fully understand how it works you would need to learn about cryptography, hashes, consensus algorithms, and more.

Here is an easy way to comprehend what the technology is about: in essence, a blockchain is similar to a regular ledger. A block of a blockchain is like a page in a ledger. The difference between blockchain and regular ledgers is that once a record becomes a part of the blockchain ledger, it also becomes impossible to delete or edit. This is exactly what solves the problem of double spending.

A blockchain is not just a ledger, but a distributed ledger, meaning that it consists of a network of computers. A computer on a blockchain network that has a full copy of the ledger is called a node. All nodes on the Bitcoin blockchain are equal, which is what adds yet another layer of security to the network. There is no central point of storage, which also means that there is no central point of failure. You can see a map of Bitcoin nodes and all kinds of stats about them by visiting the following website: https://bitnodes.earn.com/