There has been quite a bit of attention from the media in recent months as to regarding cryptocurrency and bitcoin. This has gone from a mostly underground method of purchasing items only by the techno-crowd who were in on the protocol to a method being used by a large number of people are now using it to buy everything from video games to the purchase of a many physical items. Now there are even machines is airports where people can deposit leftover foreign coins, and receive bitcoins for their excess foreign currency.
What Exactly Is Bitcoin?
“Cryptocurrency” is a good name for bitcoin, as it is a medium of exchange in virtual form and can be exchanged for goods and services through a network of digital clients. The bitcoins are stored by users on their hard drives and if their hard drive goes down, they will lose them in their “digital wallet.” The number of bitcoins that exist is limited, as they are generated by a complex formula. When the coins were first generated and released it was easy to find new coins, and they initially had a very low value. Now the criteria to find them is much more stringent, which has made the coins much more valuable. Transactions are handled and carried out in fractions of coins now, rather than in whole coins.
It is unknown just how many bitcoins are in circulation, and their value is really very volatile. It is estimated that there is a lot of value that is tied up in bitcoins that owners have lost interest in, or have been lost because their hard drive crashed. In addition, there are many people who are hoarding them, just in case their value should go way up, but probably many have been lost for good by computer and hard drive failure.
Bitcoins Can Be Found by Mining For Them
It is also unlikely that that a single individual would have much success mining for the bitcoins by themselves. Most of the people who are successful will join groups so that they can band together and share the results. The amount of money earned is split up by the amount of processing power each individual puts toward the total effort.
Other Methods of Obtaining Bitcoins
People will obtain bitcoins in other ways than just mining for them. There are actually some job sites that will pay in the form of bitcoins. There are also sites that are called “bitcoin faucets”, which pay out small fractions of the coins when people use their websites. The revenues for these sites comes from ads that they run.
What Are The Reasons For Getting Bitcoins?
One would wonder why anyone would want to use a method such as bitcoins to pay for anything when there are already so many ways to pay for things such as cash, credit cards, prepaid cards and Paypal. Many of these types of payments even remove the risks of transacting business online.
One big reason to use bitcoins is that all of your transactions will be anonymous and you can buy anything without having to leave any information at all about your identity. There could be reasons where this could be important in parts of the world where political reasons would prevail. Bitcoins are also a form of currency where governments cannot tax it. Bitcoins at this point are untraceable to anyone but the buyers and sellers who use that medium of exchange. In this regard bitcoins are becoming a viable economic means of transacting business as more and more people are becoming aware of the medium.
It will be interesting to see what the future holds for the bitcoin transaction process and how it will mature over time. If it continues along the lines similar to what has occurred so far, it may become even more viable as a legitimate system for buying and selling.