Bitcoin is called virtual currency, but a better term is cryptocurrency. Unlike physical money, there are no coins or paper money officially produced. No government entity decides how much and when to release it into the world.
Bitcoins are created digitally by people as they solve complex math problems with their computers. In many senses, it is truly decentralized. One of the interesting things about this virtual currency is that all transactions are stored and published publicly.
The currency is traded via a vast peer-to-peer network that encompasses
the entire globe. While there aren't a lot of rules regarding Bitcoin, there are some, and this helps with making bitcoins a genuine currency that works like "normal money."
Why should I use BitCoin?
There are a few major advantages to using BitCoin in place of your normal currency for online transactions, most of which stem from how BitCoins are stored.
First of all, BitCoin is a global, decentralised currency. This means that there is no country to which BitCoin specifically belongs, making it a viable currency to use all over the world. This makes international transactions simple; no longer does there need to be a discussion over whether the payment should be made in the buyer?s currency or the seller?s, nor at which exchange rate the transaction should take place.
Another big advantage that decentralised currencies have is that a Federal Reserve or national bank does not manage the value of the currency. This means that the currency will retain its value regardless of the performance of the global economy, similar to the value of rare metals and commodities like oil. It has no single point of failure; the entire Internet would have to go down for BitCoin to fail.
Second, because transactions are made directly from one person to another, there is no middleman, and therefore no fees. In a few years time there will be a slight charge for transactions due to the way that the currency is managed, but it should be much less than the standard alternatives.
Third, because the BitCoins you own are stored in a wallet file on your computer, you have full control over your funds. Since the BitCoins are not stored in an “account” they cannot be frozen, meaning that you will never be left without cash. Furthermore, there is no “small print”, transaction limits, forms or other limits like you would have with a bank.
Finally, while it does cost money to exchange fiat currencies to BitCoins and vice versa, it doesn?t cost anything to accept them, making it a great way to be paid online for goods or services.
Next, we're going to take a look at some of the ways that Bitcoin is different than traditional currencies. It's these differences that make Bitcoin such a powerful possibility. One of the main differences is that Bitcoin is decentralized. No one person, corporation or government controls the Bitcoin network. This isn't the only difference, however, so let's take a look at some things that are exclusive to Bitcoin.
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