What is Bitcoin? This is question thousands of people are asking today. This new, virtual currency is taking the financial world by storm, and we are going to talk a little bit about it here.
What is Bitcoin? – Its Origins
Satoshi Nakamoto – the nickname an unknown person used – created this new currency in 2009. The first thing you need to know about Bitcoin is the fact that no banks are involved in these financial transactions. You do not have to give your real name and no fees are charged. In fact, many businesses already accept this new form of payment from web hosting companies to manicures.
Some Benefits
– Protect your identity. Bitcoin allows you to protect your identity on the Web.
– Cheap and easy payments. Because payments are not subjects to any type of regulations or tied to any specific country, international payments are both cheap and easy.
– No credit card fees. In fact, no credit card fees are charged, which is good news for small businesses around the world.
– Investment vehicle. Bitcoins may be used as an investment vehicle, they tend to go up in value.
– Tradeable asset class.Due to the volatile nature of bitcoin’s price it’s more suitable as a short-term tradeable asset that gained immense popularity in the online trading world. Most retail brokers now provide bitcoin CFDs (contracts for difference) on their trading platforms. To learnwhat CFD trading is, follow the link.
– Easy transfers. You can send bitcoins to anyone in any place of the world by using your computer or mobile device – it is like sending money digitally.
Where to Buy Them
You can buy bitcoins in any bitcoin exchange. These special places are created with the sole purpose of selling and buying bitcoins using different currencies. To learn more about where to by the currency, read this article at coindesk.com.
Bitcoins are stored in “digital wallets” that can be hosted either in your computer or in the cloud. Think of digital wallets as virtual bank accounts, which will allow you both to receive and to send money. However, the FDIC does not insure Bitcoin wallets, and they come with some drawbacks. For instance, servers that host Bitcoin wallets have been hacked, and some Bitcoin companies have fled with the bitcoins of their clients. In addition, a virus can destroy your Bitcoin wallet, or you can delete it by accident – in case you host it in your computer.
Anonymity
Your real name will not be revealed in a bitcoins transaction, as people will only see the wallet ID record in a log – your transactions will be kept private. Buyers of illicit drugs and people related to other activities punished by the law have been using bitcoins to make payments, since these financial transactions are not traced back.
Possible Regulations
Governments are increasingly concerned about their lack of control over this new currency – they want to tax it too. Bit coins are unregulated, but that reality might be about to change.
How Bitcoin Works
Bitcoin is just a computer program or mobile app which uses a Bitcoin wallet that allows you both to receive and to send payments to other Bitcoin users. This process is simple, and this is how it works for most Bitcoin users out there. The block chair, a log that records each Bitcoin transaction, will verify the validity of your payments The system uses digital signatures that correspond to each sending address, which allow Bitcoin users to get full control over the process of sending and receiving bitcoins. Specialized computer hardware can be used in order to process these transactions, and its users will receive rewards in form of bitcoins.
A Growing User Base
The number of both companies and individuals using bitcoins on a regular basis is growing fast. Brick and mortar businesses use bitcoins such as law firms and restaurants, and online businesses such as Newegg and WordPress are among the users of bitcoins. Although Bitcoin is a new phenomenon in the financial world, it is growing extremely fast. In fact, the total amount of bitcoins in circulation it is said to be around $1.5 billion as of August 2013.
Conclusion
Bitcoin has taken the financial world by storm, and its user base is growing fast. People who need to protect their identities while making online payments will consider Bitcoin as an ideal solution for their privacy problems. Small businesses will also avoid credit card fees, which means awesome news for their bottom lines. Digital wallets allow Bitcoin users to send and receive payments quickly and easily. However, digital wallets come with a couple of drawbacks. Governments might start regulating bitcoins in the future as well
