Bitcoin is an open source, peer-to-peer digital payment system that only exists in cyberspace and does not use physical bank notes or coins. The concept of Bitcoins arose in 2008, after an anonymous user published a paper on a cryptographic digital currency and released the Bitcoin software the following year.
The Bitcoin system is not controlled by any central bank, institution, or country, but operates as a digital currency where users are able to connect directly to each other and transfer Bitcoins anonymously using digital “wallets”.
How are Bitcoins created?
Bitcoins are created in a process known as “mining” which uses the processing power of users’ computers to verify the transfer of Bitcoins between users and create new Bitcoins. Miners verify transactions by using their computers to solve complex mathematical problems. The computer that solves the problem is rewarded with Bitcoins, thereby creating an incentive for others to assist in verifying transactions and support the system.
The Bitcoin system is setup so that as more people mine Bitcoins, the odds of successfully mining one goes down, making it more difficult to mine coins and increasing their value.
Once Bitcoins are created, then what?
Bitcoins can be used to buy goods and services both online and in person with hundreds of Canadian businesses already accepting Bitcoin as a form of payment. Bitcoin Exchange services have also been created to give users the ability to convert their Bitcoins both to and from traditional currencies. In Canada, some cities now have Bitcoin ATMs to make it even easier to buy/sell Bitcoins.
The value of a Bitcoin has recently experienced some volatility, subject largely to demand, world events and businesses activities. As of June 2014, one Bitcoin is equal to $574 US dollars. Over 12 million Bitcoins have been created.
Are Bitcoins considered a real currency?
In Canada, the Currency Act, Royal Canadian Mint Act and the Bank of Canada Act contain provisions governing legal tender and currency. Only Canadian bank notes and coins are recognized as currency and eligible to be used as legal tender in Canada. Barter transaction rules apply where Bitcoins are used to purchase goods or services. Other Governments and their respective financial institutions are still in the process of determining how they view Bitcoin.
Are there risks with using Bitcoin?
Yes, there are risks. Criminal organizations have gravitated to Bitcoin because of the anonymity it offers and the fact that governments are not involved in monitoring transactions. As a result, there have been several underground community websites setup to trade in illegal goods and services exclusively using Bitcoins.
You should also know that hackers have been infecting computer networks to install Bitcoin mining software as well as compromising several high profile Bitcoin exchanges causing numerous companies to go bankrupt, leaving their users with major losses.
You should also know that hackers have been infecting computer networks to install Bitcoin mining software as well as compromising several high profile Bitcoin exchanges causing numerous companies to go bankrupt, leaving their users with major losses.
You may never need to use Bitcoin, but now you know what it is and some of the risks associated with using this relatively new digital currency.
Hiç yorum yok:
Yorum Gönder