A bitcoin is an invisible, virtual currency that can be used for transactions. Some people refer to it as a decentralized currency because no central bank controls the money supply like they do with a fiat currency, like the United States dollar. Bitcoins are mined just like gold and silver; however, instead of being mined with shovels, they are mined by solving mathematical problems.
There is not an unlimited number of bitcoins; only 21 million were created. Approximately half of all bitcoins have been “mined.” As more bitcoins are “unmined,” the program progressively makes the future math problems more difficult. This is what it means to “timeout” the discovery of bitcoins.
If you decide to purchase a bitcoin, one of the most reliable exchanges is the MT.GOX. Bitcoins are mostly used in e-commerce transactions, and have a few advantages over credit card payments for online purchases. Once the bitcoin has been sent, it can’t be reversed unless the receiver sends it back. If the consumer used a stolen credit card, then the seller would lose the revenue in the transaction. This is called a “chargeback.” In addition, no personal information is needed for the transaction.
Will the bitcoin become an acceptable currency? It is difficult to know. Governments have yet to address the bitcoin and decide upon any regulations, so it is still a high-risk bet. However, a currency only has value if people believe it has value.
About the Author:
Over the course of his professional experience, Richard has earned the following degrees: B.S. in Biology/Minor Economics from the University of Kentucky; master’s degree in Business Administration from Sullivan University; master’s degree in Human Services with a concentration in Hospital Administration from Capella University; and an ABD in Finance from Northcentral University.
In his free time, Richard is an avid outdoorsmen, and is a WeBeLo Cub Scout den leader for pack 346. He is also a coin collector and has been a first aid and CPR instructor for 20 years.