Bitcoin is a currency which was invented by an entrepreneur from Australia named Craig Wright, but which was presented under the name Satoshi Nakamoto in 2008. It is referred to as a cryptocurrency, which means that it uses cryptography to secure its transactions, rather than going through a bank or other institution. Bitcoin is not a regulated currency and it not controlled by any country or province. It was billed a peer-to-peer currency when its open-source code was released in January of 2009.
Once a user creates their virtual ‘wallet’ on a site like bitcoin.com, he or she can begin to exchange in bitcoin. From sites like the aforementioned, a user can purchase bitcoin at the currently stated exchange rate. If she is a vendor, she can process and send invoices to clients or customers in exchange for goods and services. Her customers can easily send bitcoin from their virtual wallet into hers using the vendor’s bitcoin address.
Each transaction is verified to be authentic through the digital signatures corresponding to the bitcoin address given. Bitcoin will not allow money to be transferred to an invalid address. Though each transaction is irreversible, users are able to refund bitcoin back to one another should they choose.
Business often find the exchange of bitcoin to be easier and less complicated than using a credit card system because payments can be made quickly, are easy to verify, and are irreversible. Because payment can be made without entering in personal information, users are at a reduced risk for identity theft.
Throughout the world the number of individuals and businesses who exchange using bitcoin is ever increasing. Currently it is estimated that all the bitcoin in circulation is valued in excess of $1.5 billion, with millions being exchanged daily. Less fees mean that merchants can spend less on overhead which can help them to be more profitable.
The question of bitcoin’s future really remains to be seen and makes it an interesting topic for discussion. Questions often arise due to its lack of governmental regulation, often both for and against. Its strengths are sometimes considered to be its greatest weaknesses and vice versa.