Bitcoin: The Future’s Currency?
First introduced in 2009, Bitcoin is a peer-to-peer digital payment system that has gotten a lot of media attention. In 2011, Wired Magazine wrote prematurely about the rise and fall of Bitcoin. Since then, Bitcoin has more than quadrupled in value, although its value has proven to be subject to a great deal of volatility. In December of 2013, New York Times columnist Paul Krugman called the currency “evil,” generating another wave of blogs and news coverage. So what is a Bitcoin and could this new currency be a part of our financial future? 

What Is Bitcoin?
Bitcoin is a truly unique form of currency. Each unit of Bitcoin has a code or digital signature that identifies it. Individuals who trade in Bitcoin can protect their privacy as they exchange Bitcoin using a digital wallet application and not a standard bank or financial institution. This aspect of Bitcoin makes it an attractive choice for people who do not wish for their online purchases to be tracked, and is the primary currency used by people engaging in illegal purchases on the online black market.

Every exchange is recorded in a type of public ledger or “block chain” to validate transactions with a layer of added security. The entire exchange system uses advanced cryptology methods to protect against dulterating a Bitcoin’s identity or location.

What Is Bitcoin’s Value?
Since it began being widely traded, the value of Bitcoin has been extremely volatile. Speculators drove the value of a Bitcoin up from around $13 dollars in January of 2013 to more than $1100 dollars in November of 2013. On December 31, 2013, the value of one Bitcoin dropped back down to $754 dollars. This volatility is rare among currencies, and is one of the primary reasons why people are generally hesitant to engage in large-scale investment in the currency.

Who Uses Bitcoin and Why?
Both individuals and businesses may use Bitcoin to send or send or receive payment for goods and services. The currency is convenient for making payments internationally without depending on banks. Bitcoin users can also avoid the transaction fees that PayPal or credit cards companies may charge. Since payments are irreversible and secure, merchants and individuals are less likely to suffer from fraud. Although most retailers do not accept Bitcoin, an increasing number of both online and brick-and-mortar stores are beginning to accept the currency, including over 75,000 Shopify merchants and the retail store of the Sacramento Kings professional basketball team. The number of businesses that accept Bitcoin is expected to continue to rise.

While Bitcoin is an important and interesting phenomenon to watch in the digital payment sector, it remains impractical for most businesses and individuals. However, there are certainly going to be those who are interested in investing in Bitcoin regardless of the risk involved. The volatility in the currency’s value means two things: one can make a lot of money, and one can also lose a lot of money. Caution should be exercised when investing in anything, but especially Bitcoin. However, it seems that Bitcoin is here to stay, and one can expect other digital currencies to continue to be developed and used
in the coming years.

Author Bio; 
Hailey Harper is a marketing strategist and business writer from Tucson, Arizona. She enjoys helping people with their investing, retirement planning, and marketing problems.

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