What Exactly is Bitcoin?

by , under Bitcoin

Bitcoin has gained a lot of traction and hype in the media lately but there are many of us that are still a bit confused as to what exactly Bitcoin is. Is Bitcoin just a passing fad or is it the currency of the future?

Bitcoin was established in 2009 by an unidentified person or group under the name of Satoshi Nakamoto. Bitcoin is a decentralised currency, it does not go through banks and you need not even use your real name when trading with your Bitcoin wallet. One of the biggest successes and innovations of Bitcoin is that there are no transaction fees.

Simply put, Bitcoins are used to buy goods and services from individuals or companies that trade in them or accept them as a form of payment. Bitcoins are not physical coins, but rather a digital currency and are used in online transactions or investments. Bitcoins are stored in a virtual wallet, which exists either in a cloud or on the user’s computer or cell phone.The drawback to this is that clouds can be hacked and devices can be broken or stolen.

Bitcoin makes the process of buying and selling online a whole lot easier than other available methods as it allows you to exchange Bitcoin just by entering your personal security key. However, this key cannot be recreated and if it is lost it is virtually impossible to get it back.

The Bitcoin system rests on the complex algorithms set in place that ensure that the person spending Bitcoin does indeed own them and that they don’t spend the same units more than once.

Another major advantage for Bitcoin users is that they can buy products anonymously. The buyers and sellers names are never recorded in transactions, only wallet IDs, which make transactions impossible to track to direct individuals.

Bitcoin becomes more useful as more people begin trading with it as the variety of items available to be bought and sold in Bitcoin increases. Already there is an impressive amount of items and services available to be bought in this digital currency and the variety is ever increasing.

There is no doubt that we will be seeing a lot more of Bitcoin in the future, however, banks and governments are becoming increasingly concerned over taxation, their lack of control over the currency as well as the fact the transactions cannot be traced to individuals.