Our topic today will be based on Bitcoin, Bitcoin blockchain, Classical electronic payment system, Digital cash and cash. But I will be starting from the last mentioned which is the cash till the first (Bitcoin).
Bitcoin is a virtual monetary unit that begins to exist with white paper which was published in 2008 under the fictitious name “Satoshi Nakamoto”; Satoshi is the smallest function of a bitcoin. A bitcoin unit is divisible and can be divided into 100 Satoshi.
Bitcoin was made generally known through mailing list for cryptography and has an identical appearance to an academic paper. The major reason for the production of bitcoin is to provide a cash-like payment system that allows electronic transaction but that also include many of the advantageous characteristic of physical cash, and also to have the understanding of some special features of a physical monetary units and desire to create digital cash.
CASH
It simply means ready money, which are paid for goods or services at the time of purchase or delivery. Cash is represented by an object (having material existence), and this is usually a coin or note. When handling cash to an individual its unit or value is transferred without the need of third party.
DIGITAL CASH
The most excellent payment system would be the one which monetary values could be transferred electrically through the use of cash data files. This file uses the advantage of physical cash but would be able to circulate freely on electronic networks.
One special feature of electronic data is that it can be Tran scripted any number of times at negligible cost, this feature is not desirable for money because if data cash can be copied and the duplicate used as currency, they cannot serve as a payment instruments. This problem is called “Double spending problem”.
CLASSICAL ELECTRONIC PAYMENT SYSTEM
To act against the above mention problem i.e. “Double spending problem”, classical electronic payment are used base on the central authority that verifies the legitimacy of the payment and keeps detectable evidences of current state of ownership. In this system the central authority which are normally the banks manages the account of buyers and sellers, the buyer only indicate a payment about submitting an order then the central authority ensures that the buyer has the necessary funds and adjust the account accordingly.
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