The Bitcoin Craze

Bitcoin has risen in popularity, but what is it?

If you’ve heard of the rapidly rising popularity of online currency this past year, you’ve probably heard of Bitcoin. For those who don’t know what it is, Bitcoin is an online currency. There are no coins or bills – it’s all digital. Open-sourced, everyone can take part in it and its design is public. (Source: Bitcoin.org) It is also decentralized. This means that there is no type of authority (i.e. a bank, government, or institution) that controls and regulates it. (Source: CNN Money)

Created in 2009 by a person going by the name Satoshi Nakamoto, Bitcoin is anonymous. Buyers and sellers have encryption keys instead of names and numbers. Due to the fact that bitcoins are not tied to any country or subject to regulation, international payments are easy and cheap. There are also no credit card fees. All of this has contributed to the prominence of Bitcoin in the past few years which led to the price of the online currency skyrocketing. (Source: CNET)

There are a few ways to acquire Bitcoins; exchange, transfer, and mining. There are “bitcoin exchanges” where you can buy or sell bitcoins using various currencies. People can transfer bitcoins to others using computers or mobile apps just like sending cash digitally. Last but not least, there are competitions to mine bitcoins. In these, users solve complex math puzzles. (CNN Money)

Using either a computer or a cloud, users can store Bitcoins in a “digital wallet”. This wallet, although not insured by the FDIC, allows users to save their money, pay for good and services from merchants, and send and receive bitcoins. (Source: CNET)

However, there are some drawbacks to online currency. Some of the databases have been hacked which results in owners losing thousands of digital currency. It has also been very popular for illicit activities such as buying drugs or putting out hits. As a result, the future of the bitcoin is uncertain. Countries such as Australia, China, and Japan have implemented regulations. Due to the lack of control over the currency and taxation problems, expect governments around the world to start taking action to regulate the Bitcoin. (Source: CNN Money)

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