Bitcoin can best be described as virtual currency, created in 2009 by a developer under the pseudonym, Satoshi Nakamoto. Bitcoin may give services like Paypal some competition on the merchant exchange market. Bitcoin users can perform transactions without having to pay fees, unlike Paypal.
Almost all methods of communication in this day and age is pretty much digitized. People can use VoIP instead phones, set up video-conferencing instead of in person meetings and send emails instead of faxes. Bitcoin developers have found a way to digitize barter and trade, the exchange of money for goods or services.
While there are some people who support Bitcoin, many people remain skeptical. Is Bitcoin a scam? Do the masterminds behind this digital currency have ulterior motives? One of the key features about using Bitcoin digital currency is that people can perform currency transactions in total anonymity.
Further explanation about Bitcoin describes the system as a peer-to-peer network run by contributors and freedom enthusiasts. Bitcoin, a movement that could change the way we barter and trade, has sparked a debate, dividing the digital world is into two groups.
There are those who support Bitcoin and claim that it's a smart investment. Many expect that once Bitcoin becomes more accepted, global finance will be changed. In Berlin, Bitcoin is used in bars and shops, making it an alternative local currency.
"What attracts me to Bitcoin is the possibility to be in control of my own money and to transfer that money without anybody's say-so across the world in split minutes or seconds with zero fees," German stockbroker Dennis Daiber said to The Guardian.
Then there are the naysayers who say that Bitcoin is just a scam, noting that there is no way to protect peoples' money and it's unsafe. Unlike highly regulated banking systems, there's no government involved in the Bitcoin system, so there's no way to protect investments.
The decentralized Bitcoin network was hit with hacker attacks, but its top threat, at least in the United States comes from a government agency. Last month, the Financial Crimes Enforcement Network (FInCEN) issued guidance, detailing regulations about administering, exchanging or using digital currencies. So far, three U.S. Bitcoin exchanges were shut down by FInCEN. Recent reports are that Mt.Gox, the largest and oldest Bitcoin exchange is in legal hot water and is being sued for $75 million for a business deal that went sour with a company called CoinLab.
Anonymous money exchanges are a concern and can allow people to trade digital money for illegal activities such as drugs.
"FinCEN was able to stop currency competition with technical innovations in the 90s even before their expanded powers under the U.S. Patriot Act. And, what we've got now is a FinCEN on steroids without clear restrictions from Congress," director of the Center for Financial Privacy and Human Rights, Bradley Jansen said in a podcast.
If you want to give Bitcoin a try, it's best to do your research about it first before you decide to take the leap. Crypto-currencies like Bitcoin could change global finance if it gains more popularity and goes mainstream.
