Bitcoin has been in the news for the past few weeks, but many people are still unaware of it. Could Bitcoin be the future of online currency? This is just one of the frequently asked questions about Bitcoin.
How does Bitcoin work?
Bitcoin is a type of electronic currency (CryptoCurrency) that is autonomous from traditional banking and entered circulation in 2009. According to some of the best online traders, Bitcoin is considered the most famous digital currency that relies on computer networks to solve complex mathematical problems, in order to verify and recorded the details of each completed transaction.
The exchange rate of Bitcoin does not depend on a central bank and there is no single body that manages the supply of the cryptocurrency. However, the price of Bitcoin depends on the level of trust of its users, because the more big companies accept Bitcoin as a payment method, the more successful Bitcoin will become.
Advantages and Risks of Bitcoin
One of the advantages of Bitcoin is its low risk of inflation. Traditional currencies suffer from inflation and lose their purchasing power every year as governments continue to use quantitative easing to stimulate the economy.
Bitcoin does not suffer from low inflation, as Bitcoin mining is limited to only 21 million units. This means that the release of new Bitcoins is slowing down and that the full amount will be mined in the next few decades. Experts have predicted that the last Bitcoin will be mined by 2050.
Bitcoin has a low risk of collapse unlike traditional currencies that rely on governments. When currencies collapse, it leads to hyperinflation or the disappearance of savings in an instant.
Bitcoin exchange rate is not regulated by any government and it is a digital currency available worldwide.
Bitcoin is easy to carry. A billion dollars in Bitcoin can be stored on a memory card and put in someone’s pocket. It’s so easy to transfer Bitcoins compared to paper money.
One disadvantage of Bitcoin is its untraceable nature, as governments and other organizations cannot trace the source of your funds and as such can attract some unscrupulous individuals.
How to earn with Bitcoin
Unlike other currencies, there are three ways to earn with Bitcoin, saving, trading and mining. Bitcoins can be traded on open markets, which means you can buy Bitcoins at a low price and sell them at a high price.
The value of Bitcoin has fallen in recent weeks due to the sudden suspension of trading on Mt. Gox, the largest Bitcoin exchange in the world. According to unverified sources, trading was halted due to a theft related to the flex said to be worth more than 744,000. The incident affected investor confidence in the virtual currency.
According to the Bitcoin chart, the Bitcoin exchange rate rose to more than $1,100 last December. Then more people became aware of the digital currency and then the Mt. Gox and fell to around $530.
In 2014, we expect bitcoin’s popularity to grow exponentially worldwide with both merchants and consumers, Stephen Pair, co-founder and CTO of BitPay, â€œand we anticipate the greatest growth in China, India, Russia and South America.
India is already being cited as the next likely popular market for Bitcoin to enter. Africa could also greatly benefit from using BTC as an exchange currency to bypass the lack of a functioning central bank system or any other country that relies heavily on mobile payments. Bitcoin expansion in 2014 will be led by Bitcoin ATMs, mobile apps and tools.
Worldwide experiences with Bitcoin
More and more people have embraced the use of Bitcoin and supporters hope that one day consumers will use the digital currency for their online shopping and other electronic transactions. Large companies have already accepted payments using virtual currency. Some of the big companies include Fiverr, TigerDirect, and Zynga, among others.
The Future of Bitcoin
Bitcoin works, but critics say the digital currency isn’t ready for mainstream use because of its volatility. They also point to a bitcoin exchange hack in the past that resulted in the loss of several million dollars.
Supporters of digital currencies said there are newer exchanges overseen by financial experts and venture capitalists. Experts add that there is still hope for the virtual currency system and that the predicted growth is huge.
I hope this article has helped you gain a much clearer understanding of Bitcoin, the potential, whether Bitcoin works and how Bitcoin works. For more Bitcoin articles, weekly trends, information and updates, subscribe to our blog post.