Making payment is one of our routines and its mode has changed very drastically. Initially there was barter system then we moved from gold/silver coins for making payments, to paper currency, plastic money and finally electronic payment. Now there is a new emerging concept-cryptocurrency. Bitcoin is one of the cryptocurrencies which is gaining popularity day by day.
What is it?
Bitcoin is a digital currency used over the internet for trading or payment for services. It is encrypted using cryptography for security hence cannot be easily counterfeited. It can be transferred from a computer or smartphone to another and cannot be tracked. Its internationally recognized code is BTC.
Bitcoin was introduced in 2008 as a peer to peer, electronic cash system by an anonymous group of individuals. It is a decentralised currency that is created, used and controlled by its users. The Bitcoin phenomenon is growing at a rapid pace. The currency is finite in number to keep inflation rates low. A typical bitcoin address has alphanumeric code with some signs.
As it is a digital currency, one can carry thousands of bitcoins in his/her phone or any electronic storage device. Any transaction one does using bitcoin is untraceable and there are no taxes involved. Unlike physical currency one cannot stole bitcoins because theft requires access to authorized physical device to transfer them. Its transfer occurs instantly therefore one cannot reverse the transaction and most importantly bitcoins are not liable to any government or financial institution making it accessible to everyone.
The largest Bitcoin trading platform is Tokyo-based Mt.Gox. It is also the most reliable place to buy bitcoin. The bourse always displays an exchange rate and can show a chart with historical rates. Bitcoin is divided into smaller units called Satoshis. 100 million satoshis make 1 BTC.
Volatility is one of the biggest pitfalls. The value of bitcoins could nosedive at any time or appreciate several times over in just few hours. Since supply and demand of bitcoins is not monitored by any central authority, there is a low liquidity. The other problems include frequent hacking attempts, confusion among users etc. Since bitcoin transactions are not easily traceable, they can be used for money laundering and for all manner of illegal online transactions.
Usage: There are number of places where one can spend bitcoins. Some popular websites accept bitcoins for making purchases and donations. Certain physical establishments in the USA have started accepting Bitcoins payment. Besides, as it has a trding platform, it is also used for investment purposes. Recently RBI said that it has no intention of regulating virtual currency (BITCOIN) right now cos' it will first seek to understand Bitcoin although it has recently come under regulatory gaze in US and other countries over concerns that it can be used for illegal purposes. I hope it was informative.
Tags Info Technology