ABSTRACT

This report is made

based on BITCOINS
how they work, how
they are used,
Advantages and
disadvantages of
using BITCOINS and
frauds & scams
correlate with these
BITCOINS

Ashen Chethaka
Siriwardana

REPORT 1 S1461498

BITCOINS
Table of Contents

Introduction to “BITCOINS” …...……………………………………………………………………..

How BITCOINS work and how they are used in real world………………………………..…………
Uses of BITCOINS…………………………………………………………………………………….
Different types of BITCOINS………………………………………………………………………….
Desktop, Mobile, Online wallets…………………………………………………...………………….
Advantages and disadvantages of BITCOINS…………………………………….…………………..
Frauds and scams linked with BITCOINS……………………………………………………………..
Report conclusion………………………………………………………………...……………………
References………………………………………………………………………….…………………..
Introduction to “BITCOINS”

Bitcoin is a form of cryptographic money or advanced cash that is electronically made, obtained,
and used. It satisfies a similar need as the usual currency, but all happens with no national bank
with a single curve. It was imagined in 2009 by an obscure developer or a gathering of software
engineers under the nom de plume Satoshi Nakamoto.From the legal sensitivity of programmers to
the fame of speculators, the growth was transient. The notoriety of the term digital currency can be
calculated as it has become inseparable from Bitcoin. Decentralization sets bitcoins separated from
regular money. Decentralization implies the nonappearance of focal body to direct the framework.
With bitcoins, there is no money-related foundation between you and the individual you manage.
Bitcoin is a definitive popularity-based instrument that has taken the power of a solitary partnership
and given it to clients. This decentralization has its own advantages: no transaction costs, and no one
can investigate the transaction records. It is simply the individuals who control it. Anyone from
around the world can be a part of this framework and guarantee its validity and safety. Each
transaction is documented freely, so it is hard to duplicate bitcoins, make counterfeit ones, or burn
through ones that you do not claim. It is conceivable to lose your Bitcoin wallet or remove your
Bitcoins and lose them permanently. In addition, burglaries have also been made from sites that
allow you to store your bitcoins remotely. The estimation of Bitcoins has gone here and there
throughout the years since it was made in 2009 and a few people do not believe it's protected to turn
your 'genuine' cash into Bitcoins.

How BITCOINS work and how they are used in real world
As a user, we can begin with Bitcoin without understanding the specialized subtleties. When we
have been introduced to a Bitcoin wallet on our PC or cell phone, it will produce our first Bitcoin
address and we can make more at whatever point we need one. We may unveil our addresses to our
companions so that someone can pay us or the other way around. Truth be told, this is much about
how email works, then again, technically Bitcoin addresses can only be used for a single time. A
developing number of online retailers are tolerating bitcoin as a substantial type of instalment.
Overload has been a vocal chief in empowering you to utilize bitcoins for any buy on the site.
Different organizations supporting bitcoin as an instalment technique incorporate Microsoft,
Newegg, TigerDirect, and numerous others. Right now, web based business locales which
acknowledge bitcoin are generally uncommon, however the way that these immense organizations
are happy to dive in is an incredible sign for the eventual fate of the business, so try to utilize each
open door you need to shop on a website which permits you to utilize bitcoin in the event that you
can.
Uses of BITCOINS
1)Privacy in our money spending
2)Low cost for money transferring
3)Day to day goods purchasing can be done using bitcoins
4)Assets and wealth can be hidden from government and taxation department
5)can carry on illegal activities and transactions like gambling

Different types of BITCOINS

Bitcoin wallet is often referred to as an advanced wallet. To exchange bitcoins, a merchant must
create a computerized wallet. A Bitcoin wallet is almost the same as a physical wallet. Be that as it
may, rather than placing away physical money, the wallet stores the related data, such as the secure
private key used to access Bitcoin addresses and complete exchanges. examples of Bitcoin wallets
are work area, versatile, web, and equipment.

Desktop wallets
Desktop wallets are implemented on a PC and offer the client unrestricted control over the wallet. They act as a place
for a client to send and collect bitcoins. Additionally, they allow the client to store a private key. Bitcoin Core,
MultiBit, Armory, Hive OS X, and Electrum are some examples of desktop wallets.

Mobile Wallets
This plays out similar capacities as a work area wallet and encourage instalments in physical stores by means of
"touch-to-pay" and close to handle correspondence (NFC) examining of a QR code. Bitcoin Wallet, Hive Android,
and Mycelium Bitcoin Wallet are instances of this. Bitcoin wallets would usually be either iOS or Android viable.
There is noteworthy malware acting like Bitcoin wallets, so it is wise to examine choices before deciding which one to
use.
Web Wallets
This promotes admission to Bitcoins from anywhere, on any program or cell phone. The determination of your web
wallet must be done with caution as it stores your private keys on the web. Coinbase and Blockchain are well-known
online wallet suppliers.

Hardware Wallets
This is by a long shot the most secure sort of Bitcoin wallet as they store Bitcoins on a physical bit of hardware that is
normally connected to a PC by means of a USB port. They are for all intents and purposes invulnerable to infection
assaults, and scarcely any examples of Bitcoin robbery have been accounted for. These gadgets are the key Bitcoin
wallets that are not open, and they regularly cost between $100 and $200.

Advantages and Disadvantages of BITCOINS

Anonymous and Private

Bitcoin exchanges are confidential and personal. Not at all, as in instalments via the bank, where
exchanges can be tracked and differentiated, bitcoin exchanges will not be identified. A person can
only know the addresses of the bitcoin wallet on which the instalment has already been sent and
received. In any case, in which such addresses have a location, they cannot be recognized. It
resembles an instalment that can be accompanied by a particular ledger, but these documents have
no place to be recognized. (However, in the event that an individual uses the same Bitcoin address
at each transaction for a substantial period of time, there is a possibility that the individual will be
followed).
Payment Freedom
Paying by bitcoins gives you the most significant chance. In any aspect of the world, Bitcoin can be
transferred to any person. There is no go-between in the middle. There are no bank occasions /
strikes. There are no restrictions or fringes. No restriction on instalments.
Low/Minimal Fees
Paying through Bitcoin is low, and some of the time there is no exchange of expenses by any
means. Everything depends on the need of the individual. In the off chance that a person wishes
his / her exchange to be prepared quickly, he / she needs to pay an exchange cost that is still low
when compared with any financial representative or advanced pocket.

Fewer risks for merchants

Bitcoin exchanges are stable, permanent, and contain no confidential or individual customer data.
This shields shippers from misfortunes caused by misleading or incorrect charges.
Central governments cannot take it away
"I pledge to pay a total of 1,000 rupees to the conveyor," but we still get the gold off the chance that
we are going to keep the deposit. "NO" is the right answer. In addition, the administration says that
a paper note may have an incentive up to Rs 1000 and yet imagine a scenario where the other
government, when in control, demonetizes it and says that it is a waste and has no respect for it. As
a result, shoppers are losing their monetary value and legitimacy. This is not for bitcoins. The
legislature cannot recover your bitcoins because they're decentralized, and nobody has control over
them. The most severe is that the administration will boycott it, but your bitcoins have some
motivation in certain markets / places / areas where it is still legal and can be liquidated along those
lines.

Money Laundering/Black Market

At first, bitcoins were used for tax avoidance and individuals working in illegal economies, who did
not want to reveal their own data to make sure they had an instalment. In tax evasion, going
between / average people will collect cash starting from one source and then transfer it to the next
source via bitcoins.

Lack of recourse
If you are unfortunate enough to lose your bitcoin wallet, you have lost all of your bitcoins in that
wallet. You cannot recapture it, and it is lost forever unless and until you've backed up the wallet
with a reinforcement expression code. This reinforcement expression code can be used to restore the
missing bitcoin wallet balance.
In the off chance that a Mastercard / Load Card has been taken, we may consider the shipper to drop
the card and order another one even though there should be an incident of Bitcoins, since it is
decentralized and nobody has authority over it, we don't have an individual / association to call.

Volatility
Bitcoin costs are unpredictable and builds / decreases at an extremely high rate of movement.
Theorists want to leverage it while licensed financial experts consider it exceedingly unsafe, and
therefore not all speculators put money into bitcoins.

Frauds and scams linked with BITCOINS

Fake Bitcoin Exchanges
In 2017, South Korean monetary specialists and the neighborhood Bitcoin people group uncovered
one of the most tricky Bitcoin tricks: a phony trade called BitKRX. It introduced itself as a major
aspect of the biggest exchanging stage the nation and took individuals' cash.

Ponzi Schemes

Bernie Madoff might be one of the most notable Ponzi rogues. He did it with standard ventures. Be
that as it may, the standard of a fraudulent business model, in which you take cash from new
financial specialists to pay past speculators, can be applied to Bitcoin tricks. In 2019, three men
were captured in a $722 million digital money extortion plot. The men worked BitClub Network for
quite a long time. The plan requested cash from speculators in return for portions of cryptographic
money mining pools. It likewise probably compensated speculators for enlisting new financial
specialists. As you can envision, the financial specialists never got any profits on their interests at
long last.

Fake Cryptocurrencies

A typical trick is to introduce another digital currency as an option to Bitcoin. The thought is that it's
past the point where it is possible to take advantage of Bitcoin and that you have to put resources
into one of these best in class cryptographic forms of money. My Big Coin was closed. Customers
took $6 million from the fraudsters behind My Big Coin to bring capital into the fake digital money
and then redirected the funds into their own ledgers.

Report conclusion
Bitcoin is going to achieve ubiquity and could even overtake official monetary norms. To many
people, Bitcoins can be helpful. You can use them in any nation because they are a worldwide
currency, without shifting between monetary types. The Blockchain is genuinely safe and helps you
to ensure that the cash goes to / from the right person. Individuals who accept Bitcoins would not
have to pay for the transfers, and Bitcoins have a lot of assistance. This would help Bitcoin attract
more customers, and it could replace official monetary forms if everyone uses Bitcoin. It has a few
challenges, but a portion of these are on the basis that Bitcoin is another issue, so they will be a
concern to a lesser extent over the long haul. The others could be evaded without much of a stretch.
References
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Ben Mezrich, Bitcoin Billionaires: A True Story of Genius, Betrayal and Redemption

https://cryptocurrencyfacts.com/uses-bitcoin/ (Accessed 17 SEP 2020)

Mark S Ditroil, https://www.investopedia.com/terms/b/bitcoin-wallet.asp#:~:text=Technically%2C
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