Bitcoins? The idea of the newly developed digital currency still confuses many and can make even some of the smartest people dizzy at the thought.
Created in 2009, the digital currency is gaining fans as it eliminates the “middle man,” also known as the banking industry. This means users of the currency do not incur transaction fees, credit card fees, are not subject to banking regulations, and transactions even go nameless, which opens up the purchase power of the marketplace ten-fold.
To acquire Bitcoins, one isn’t able to do so by going to their local bank branch. Bitcoins are most commonly purchased through what is known as a “Bitcoin exchange.” Bitcoin transactions occur when users can send Bitcoin currency to one another digitally, whether on their computers or a mobile application that allows for the exchange of Bitcoins. Think of sending money to a friend or relative using a Chase or Bank of America account, but instead of sending cash digitally, Bitcoins serve as the currency to complete the transaction, and users will see their Bitcoin account affected accordingly.
Users of the currency store the amount they have in a “digital wallet” similar to how cash is stored in a checking or savings account. This wallet serves as a resource for users to send or receive Bitcoins, conduct transactions, along with providing a means to save Bitcoins if more are purchased or acquired. A major difference between the storage platforms for Bitcoins and cash is that Bitcoins are solely stored in a cloud or on a user’s computer. This means there is no “Bitcoin” location where you can deposit and withdraw Bitcoin currency.
While this currency presents its advantages, a major downfall is the anonymous environment that allows for users to make transactions without their names being revealed. This obviously is a hotbed for illegal activity, fraudulent transactions, or transactions that can be misrepresented, while offending user is unable to be traced. Furthermore, which such an overwhelming amount of activity solely existing in the cloud or on the computer alone, the hacking of Bitcoin servers, deletion of currency on computers, and the potential for destructive viruses that could wipe out a users digital wallet are some major areas of concern that have not been fully addressed. Many of these obstacles still loom over the currency mainly because these transactions or payments are not associated to any country or are not subject to any financial regulation worldwide, giving it the appearance of a financial Wild Wild West.
Though still in its infant stages, the digital currency has a huge question mark next to them due to the lack of regulation that surrounds the currency. A number of areas such as currency protection, taxation, and the creation of a controlled environment where business can be conducted safely will have to be flushed out before mainstream acceptance occurs.
