05 / 30 / 14

Bitcoin: What Is It?

There?s a good chance that you?ve probably heard of the term ?Bitcoin? at least once. It?s basically an online payment system that makes use of digital money. What makes it different from many of the online wallets out there, such as PayPal and Google Wallet, is that Bitcoin has no middleman. Transactions made using Bitcoin online are made from the seller directly to the buyer. Although the concept of Bitcoin as a crypto-currency was first developed in 1998, the actual concept was first published in 2009. Bitcoin is becoming more and more popular as eCommerce continues to grow.

Who controls Bitcoin?
First of all, Bitcoin is controlled by the users. Nobody owns the technology although many people have worked on it. Developers can work to improve the software but cannot change the protocol. This is because users of Bitcoin can choose whatever software and version that they want to use.

How does it work?
There are a number of Bitcoin exchanges out there, such as Mt. Gox, that let you buy or sell Bitcoins using different currencies. As a user of Bitcoin, all you need is a computer program or mobile app that provides you with a Bitcoin wallet. You can then send and receive Bitcoins. There?is a public ledger known as the block chain that keeps track of every transaction ever made using Bitcoin, thereby allowing your computer to verify each transaction?s validity. Using Bitcoin is actually easier than using your credit card or debit card. This is because you don?t need a merchant account. You just make your payments from your wallet application, either via your computer or your smartphone. All you have to do is enter in the address of the recipient and the amount of Bitcoins you?re sending.

Why should you use Bitcoin?
There are actually a huge number of benefits to using Bitcoin for your company. In fact, the benefits of the service account for the growing amount of businesses that make use of it. In addition to brick and mortar stores that have begun accepting Bitcoin, such as apartments, restaurants and even law firms, many large online services have begun using Bitcoin as well, including WordPress and Reddit. Millions of dollars worth of Bitcoins are being exchanged on a daily basis, with the value of all Bitcoins in circulation exceeding $1.5 billion. The following are some of the benefits that Bitcoins offer:

  • Trustworthy service?? Because of the block chain, you can verify any transactions at any time and no one can control or manipulate the protocol due to the fact the block chain is cryptographically secure, making the service both transparent and neutral.
  • Protection against identity theft?? Because Bitcoin transactions can be made anonymously, users don?t have to worry about identity theft.
  • Less risks for merchants?? Companies that use Bitcoin will be protected from losses that are caused by fraudulent chargebacks or fraud due to the fact that all transactions are irreversible, secure and contain no sensitive or personal information.
  • Use it anywhere?? There are no imposed limits on Bitcoin services and Bitcoin can be used anytime, anywhere in the world.
  • Low fees?? On a basic level, there are no fees. However, if you want to take advantage of additional services, than minor fees may apply. For example, users can pay a fee in order to receive priority processing while merchants can pay fees for merchant processors that will help convert Bitcoins into flat currency and deposit them directly into their bank accounts.

What are some of the drawbacks of Bitcoin?
Although Bitcoin has many benefits, it’s not without its disadvantages:

  • Lack of awareness?– Many people don’t understand how Bitcoin is used and need to be educated for the use of Bitcoin to grow.
  • Volatility?- There are a limited amount of Bitcoins, which means that it has volatility as demand increases everyday.
  • Incomplete features?- It’s still in its infancy stage, which means many key features are still incomplete.

The advantages make Bitcoin an excellent monetary service to take advantage of, both for users and merchants. The only real drawbacks are the volatility of the Bitcoins and the fact that many people are not educated well about the service.

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