Peer to peer technology has evolved to accommodate payment systems, as exemplified by Bitcoin. It is a digital currency that can be used for personal and business transactions at a reasonable cost. Sometimes called the currency of the Internet, Bitcoin is not subject to any central authority. Established about five years ago, it has grown rapidly with many speculators claiming that this rise will continue for the foreseeable future.
More about Bitcoins
Bitcoin describes the actual technology in play. These coins represent the currency itself and are the ones that are transacted with. They are sent or received through wallet software running on a computer, web app or smartphone. They can be obtained by exchanging products and services or by mining.
What is mining?
Mining is simply the process by which new Bitcoins are created. For every transaction that takes place, records are stored in a consistent manner in a public database called the block chain. The ones who maintain these block chains are the miners and their reward is newly created bitcoins.
Using Bitcoins
These coins can be easily obtained for different currencies. The most painless way is to buy them in cash. There are companies that provide exchange services to their clients, with rates determined by factors such as volume.
There are people who have invested in bitcoins with the expectation that their value will rise. Although this plausibility is undeniable, it carries with it some risk. There are vulnerabilities in these coins and this factor makes large-scale investing difficult. This, along with some inherent limitations such as the irreversibility of transactions, the volatility of the Bitcoin exchange rate, and the limited discretion of the user, make reserve investing only for experienced investors. On the upside, however, Bitcoin can bypass inflation, making it ideal for places where national currencies are problematic.
The future of these coins
Bitcoin has received a mixed reaction in the market. Some economists argue that this technology has offered a digital currency that has long been desired. Others find it less compelling, claiming its lack of reliability and variability are off-putting. Nevertheless, many merchants have warmed to it, and its growing popularity suggests that its success as a mainstream means of payment is to come.
If you are new to bitcoin and spend a lot of your time online, you should give it a try. It offers the kind of unique flexibility and convenience that other available payment gateways lack.