As a response to an ever weakening world reserve currency, an anonymous person introduced the idea of paying for goods and services with bitcoin currency, but what is bitcoin, really? Bitcoin is a virtual currency that is stored in a digital wallet on one’s computer or on a cloud storage system. While most governments initially viewed bitcoin as a flash in the pan novelty, some are starting to take a more seriously look at the virtual currency phenomenon and its implications for physical world market economies. Here are some of the special features of bitcoin currency, methods for obtaining and exchanging bitcoin and the perceived risks associated with using bitcoin as one’s primary medium of trade.
Benefits and Features of Bitcoin Currency
As China and other BRICS nations that include Brazil, Russia, India and South Africa recently called for a more equitable world reserve currency, a person under the alias of Nakamoto created the bitcoin currency. While it is not exactly what those nations had in mind for a central currency, it is gaining popularity with businesses and individuals at a grass-roots level. The bitcoin currency is a way to purchase items without a paper trail that leads back to a specific person. According to reports, the only unique identifier for the currency is one’s wallet identification number. To date, there is no fee associated with the use or exchange of the bitcoin currency online or in physical stores that accept the virtual currency. This makes it appealing for those conducting trade across national borders.
Acquiring Bitcoins
Because of the current lack of fees and regulations, obtaining and exchanging bitcoins is relatively simple and inexpensive. The internet is full of stories of people who purchased bitcoins as a casual investment when they were first introduced in 2009 and have now happily reaped tidy sums in return. The most popular way of filling one’s virtual wallet with bitcoins is by purchasing the virtual currency on one of the bitcoin exchanges like Mt. Gox. When conducting business transactions or simply giving the bitcoins as gifts, people transmit bitcoins online via traditional computers or by using specially designed mobile applications on their smart phones. The most interesting way that people gain bitcoins is through a process known as bitcoin mining. Bitcoin mining involves solving mathematical problems that help to support bitcoin transaction integrity; people typically use customized computer systems during the mining process.
Risk and Controversy Surrounding the Use of Bitcoin
The same bitcoin feature that was valued as a means for individual privacy is the very characteristic that governments find most disturbing. Government agencies recognize the potential for the proliferation of fraudulent activities through the use of an anonymous virtual currency. However, their greatest concern with bitcoins is the inability to gain tax revenues from the new currency yet. The most prominent threat to bitcoin investors is the currency’s anonymity when bitcoins are somehow lost or stolen by an accidental deletion or the deliberate actions of hackers.
Conclusion
Although the perceived risks of relying solely on bitcoin currency to buy goods and services is great, bitcoin has undeniably provided at least a good short term investment for speculators. These amateurs investors long for the day that they no longer hear the question, “what is bitcoin” because they aim to make bitcoin the currency of choice for global citizens
