is a new digital currency and at the same time, a new method of making payments. Its supporters praise independence and detachment from conventional banking and financial systems. Critics say it encourages anarchy, crime is not just another bubble. As usual, the truth lies somewhere in the middle and each side are sufficient arguments and counterarguments perpetual discussion. But first things first:
Bitcoin is the first implementation of the concept of a crypto-currency, digital currency that uses cryptography to be created to control transactions. Issuance of a Bitcoin involves solving a mathematical operation called “mining” – “mining” by analogy with the extraction of gold. Difficult problems is growing, the users involved in creating a Bitcoin is rewarded with a share of money, out of a total of 21 million Bitcoin currency that can be generated.
Unlike a financial system based on a central bank issuing the currency, Bitcoin network is not owned by anyone, but is created and controlled by those who participate in it. Users can create custom address “wallets” that preserves digital currency acquired or purchased. Transactions can be made directly between any two users, regardless of their location and without the need for an intermediary.
Although transactions are anonymous, meaning that any user can have any number of addresses without their identity all Bitcoin currency history from creation until the last transaction recorded in the “block chain”. For example, if you consult transactions history for WikiLeaks donations address (1HB5XMLmzFVj8ALj6mfBsbifRoD4miY36v) we see that has so far received about 3856 Bitcoin. This huge database, with about 19GB is shared among all users of the system to prevent a single entity to control the payment system and to verify each transaction.
Bitcoin exist in physical form, the American entrepreneur Mike Caldwell Casascius offering so-called Bitcoin, Bitcoin is a unique code embedded in a currency that can be plated with gold.
How did Bitcoin gain value?
Like any means of payment, Bitcoin has value as long as its users to trust it and recognize the currency as a way of intercession of a transaction. Bitcoin rise began with the deepening economic crisis and the collapse of the banking system. Depositors have seen their savings locked in banks could not make transactions, and digital currency in which trade is conducted direct and free of charge, has emerged as an innovative solution.
What are the advantages of Bitcoin?
According bitcoin.org main advantages are:
- Bitcoin currency can be transferred directly from one user to another without going through a bank or other financial entity, so no taxes;
- Bitcoin wallet may not be locked like a bank account;
- There are no limits on the amount of the transactions;
- Transactions are anonymous, transparent, and can be made from any location with Internet access.
What are the disadvantages of Bitcoin?
The main disadvantages are resulting from how the network was designed and the public perception of this payment system. Not covered by a central bank, currency Bitcoin value can vary greatly, users can lose considerable sums in small time intervals. The European Banking Authority (EBA) has issued a warning in December 2013 considering risky Bitcoin transactions and advising users to not deposit in the Bitcoin economy.
Bitcoin is still a new technology started to be regulated to a certain extent in several countries. Among the advantages we can mention that Bitcoin enables international transactions secure, fast and without commissions.No, they cannot.
What is the future of Bitcoin?
Not all economists agree with Paul’s statements Krugmanm, and experience teaches that traditional banking systems can fail miserably bankrupting customers. FBI proven to combat illegal financial activities, arresting suspects administration Silk Road, a page where drugs and weapons were traded via Bitcoin. Unlike the $ 100 bills, the currency preferred by criminals over the world, Bitcoin transactions can be traced and is available to anyone in the “block chain”.
In early 2000, PayPal and eBay failed to pass the dot-com bubble, and now PayPal is a universally accepted means of payment. David Marcus, president of PayPal, said in early 2014 that has confidence in Bitcoin and the company is studying the possibility to accept payments in Bitcoin.
Also, a Google official confirmed that evaluated the possibility of using Bitcoin payment in their system. If Bitcoin currency is accepted by major technology companies could become one of the payment systems of the future.
Even if Bitcoin will not only be a speculative bubble, the concept of digital currency will continue to exist and will become the means to do “barter” in the Internet world. Any two users which gives a value of a currency exchange digital can be used for mutual transactions. Of course, the principle also applies to the larger community. The best example is the announcement of a Native American tribe that wants to launch its own digital currency called MazaCoin to abandon the dollar.
Another possible use Bitcoin software is to help scientific research. Such a concept is Riecoin, a digital currency that is byproduct finding prime numbers ever higher. Most definitely, constructive uses for Bitcoin will be found at all times.