Bitcoin is a cryptocurrency that has risen in popularity in recent years. Though it is expanding, many people are trouble truly understand its value.
Satoshi Nakamoto, the creator of Bitcoin, published a document that details the roadmap of creating the cryptocurrency. Satoshi Nakamoto describes Bitcoin as a “A Peer-to-Peer Electronic Cash System”.
Bitcoin is a decentralized digital currency, meaning there is no single entity that governs the currency. Bitcoin revolutionizes the way people can control their money. The idea of “Peer-to-Peer” means that users can directly send money to another user via the Internet without the hassle of a middleman. This means there is no interference from a bank or a clearinghouse. Additionally, this type of freedom allows people from all over the world to handle their own exchanges.
Bitcoins are stored in digital wallets that can be accessed on computers or a mobile device. With easy access, users can send. receive, or make purchases with bitcoins on their phones. Users also can exchange their bitcoin currency for other types of currency such as Euros and US dollars.
Bitcoin transactions are secured and verified by individuals, or miners. Miners verify if the transaction is valid. Once verification is complete, miners are rewarded with bitcoins. Typically transactions are secured between people, but Bitcoin offers some transparency. Once these transactions are verified, they are recorded and stored in a public ledger. In essence, public ledgers are record-keeping systems that anyone can view. This public ledger for bitcoins is known as the blockchain. However, they do provide some form of anonymity by keeping users’ identities secure.
Bitcoin eliminates the need of a bank or a clearinghouse, so any fees typically associated with those types of accounts are eliminated. For some, finding a bank that does not have high fees is a high priority.
Since there is no one who strictly controls the entire process of bitcoins, it is an absolute freedom for some. However, it is wise to be careful with such freedom because there is no central figure that will help reverse transactions. Most websites advise that bitcoin users to treat the currency like real money and to be cautious.
A main concern for businesses and merchants would be the fees associated with accepting bitcoins. Since the transactions are controlled directly between two people, businesses and merchants will have more control over their transactions. Any fees that are associated with accepting credit cards or debit cards will be eliminated. Essentially, the merchants will pay virtually nothing to receive funds from a consumer. Lastly, larger payments can be made using bitcoins because there is no limit that prevents users from sending money.
Another concern for businesses and merchants is the limitation of foreign transactions. Foreign transactions have limitations such as exchange rates and fees. Sometimes these types of transactions could also take quite some time to clear. Using bitcoins removes the hassle of these limitations. As previously mentioned, transactions with bitcoins cannot be reversed, so businesses and merchants will not be at risk of chargebacks. Chargebacks are reversals of credit card payments that come directly from credit-card providers.
Bitcoin is a growing community, so it is ever expanding. Accepting bitcoins costs almost nothing for businesses. Those who begin accepting bitcoin will be able to garner business from the small community that has already been established. Because Bitcoin transactions are recorded in a public ledger, consumers and users can view these transaction and might be more drawn to businesses who accept bitcoins. Most businesses are required to provide accounting documents that detail transactions and activities. Once again, the blockchain offers the transparency by detailing these transactions.
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