What is BitCoin
For now the value of bitcoins remains. There is inherent value because they are limited and “secure”—though again consider that the cryptography used to create the algorithms and the virtual coins was created by an organization which has admitted to creating backdoors into everything so that they and they alone can enter.
How to Use it
Many people have different opinions about Bitcoin, but one fact cannot be dispute- people are taking notice of this revolutionary form of currency. Last year, one Bitcoin did not even bring in $15. Prices have soared to as high as $1,200 this year but it has also dropped to almost half of that recently. If you have never used or owned a Bitcoin you probably are very confused about what it is. Bitcoin is a digital currency and is unique in the fact that it is created online through a process known as ‘mining’ which is a difficult and time consuming process. Most people would not bother to invest the time or effort into trying to mine Bitcoin because it is much easier just to buy it at an online exchange. Bitcoins can be used to make purchases on line and operates on a similar premise as cash.
Bitcoin has a number of advantages:
- Because it is the first crypto currency to gain the public’s attention and trigger the imagination, Bitcoin has a huge advantage over other virtual currencies that may try to capitalize on the growing trend and interest
- Unlike other forms of currency, there is a distinct limit to how much Bitcoin can be produced. No more than 21 million Bitcoins will ever exist so it is unlikely to drop in value due to an influx of currency. It avoids the major issue facing the American dollar today.
- As one of the few decentralized currency, Bitcoin does not have any ties to any one organization or entity, there is no government interference and there is no manipulation by a single investor or producer.
- Transaction costs are much lower and there are very limited fees when compared to typical online transactions with a credit or debit card. Bitcoin works like online cash- it is quick and easy.
- Bitcoins are more anonymous and have less of a paper trail than bank accounts and credit cards have. You set up your own “wallet” on your computer and there is no need to give personal or financial information. You can have unlimited wallets on the same computer as well.
- No high-ranking authorities have the power to manipulate, withhold, or affect the availability or the value of Bitcoins.
- Bitcoins are an independent form of currency that could be used around the world. The value is the same wherever you are. There would be no more concerns over converting US dollars into Euros or some other currency. Bitcoin is a Bitcoin whether you are in the United State or in Japan.
Bitcoin also has some disadvantages which include:
- The price or the perceived value of a Bitcoin has always been and continues to be extremely volatile, making it difficult to assess its real value. This makes investors who are interested in the crypto currency very leery because they could buy $50,000 of Bitcoin today and a month from now it could be worth $150,000 or it could be worth only $10,000. This extreme fluidity and instability causes many investors to think again about investing in Bitcoin.
- The level of anonymity that is offered by Bitcoin may encourage people to use it for illegal and unethical purposes such as tax evasion, weapons procurement, illegal drugs, sex trade, gambling, and other activities.
- The simple truth that Bitcoins is a virtual currency and that it exist only in digital form means that they are very vulnerable to loss. Without a tangible item to hold onto and to see, theft and loss can be very prevalent. Losing the Bitcoins could be as easy as someone hacking the computer they are stored on and empting the wallet. This is a big issue that Bitcoins need to overcome.
- There also is the scary thought for investors that there is no guarantee that Bitcoins will still be here in ten years or if they will still have any value at all. Currently, the Bitcoin phenomenon has been fueled mostly by a small group of users. More and more corporations and businesses are starting to take notice but until it has a proven track record over a period of time, it is difficult to say how long Bitcoins will be around.
- If Bitcoins ever did become controlled by the governments, then regulations could be passed that would severely restrict Bitcoin usage. This could cause some purchases to no longer be viable and those who have bought into Bitcoins may find themselves with thousands of dollars in the virtual currency that they cannot spend due to the regulations and controls that get passed. If people who have Bitcoins cannot use them, the novelty will wear off and the Bitcoin craze will quickly die out.
- Bitcoins do not implement many of the security measures or secure methods of handling and transactions used by regular banks and credit card companies. Bitcoin does have some built-in features that can help protect your investment but they must be initiated ahead of time when you first set up your wallet. Bitcoins can be lost if you forget your wallet account information or if someone else gets a hold of your access key and gains access to your wallet. There is no customer help line and not federal or state agency to report Bitcoin theft to.
- This system of currency just does not sit well with many people and it will take time and a lot of observing and watching before people really get behind this currency, and by the time they do, it might be too late.
It is easy to see how some people would be very welcoming and opened to the idea of a virtual currency. Online transactions are becoming more and more common and more people buy online than ever before. Having a digital cash currency would really help the online market grow. However, there are an equal number of people who see potential short comings and problems with the Bitcoin system. The ability to engage in illegal activities, funded by a virtually untraceable money source, raises many red flags for people. It will take time and an eventual compromise to bring the Bitcoin of out the realm of geekdom and into mainstream commerce. It will be difficult, but it can be done- time will tell how successful it is.