Bitcoin – The emerging virtual currency

The most important thing about bitcoin is that it is entirely decentralised; there is no central bank backing it, so it is believed that it cannot be driven by any one. Other virtual currencies, which previously came up like the Beenz, Lindens, E-Gold, Flooz and WoW gold had a centralized controlling unit. Thus this currency cannot be moved by any central body like in the case of other currencies where a central bank intervention can make it move to the higher or lower side as per the central bank stance on the financial situation of the country to their benefit.

What are bitcoins?

Bitcoin is a virtually traded currency so they have no direct buying value as such in direct however they can be exchanged against the big brother US dollar and traded at a value with respect to dollar. The last market price of one bitcoin was around $950.

Bitcoin_euro

Bitcoin values are set not by a government authority but partially through a complicated mathematical algorithm and partially by what people think they should be worth at any moment. The bitcoin algorithm is said to be so complicated that it may take 100 of years thus it is considered to be safe to buy bitcoins. Recently there was a news that Bitcoin has an inherent flaw that could allow a powerful few to take control of the now-decentralized currency. All it would take is a group of cheaters according to a research paper released Monday by Cornell University post-doctoral fellow Ittay Eyal and Professor Emin Gün Sirer. The flaw is due to the nature of how Bitcoins are mined by people themselves.

How can you buy bitcoins?

Foremost thing you need to do is get a “Bitcoin Wallet”. Bitcoin is an internet based currency so you will need a place to keep the Bitcoins you buy. Download the Bitcoin client for your Operating System from http://www.bitcoin.org. The install will start downloading the blockchain which is aroung 6 GB. A copy of blockchain could also be bought online if you are worried about the size of file to download. Once the client is installed and updated, click “New” to get your wallet address. It will be a long sequence of letters and numbers. One of most important things you can do is make sure you have a copy of the wallet.dat file on a thumb drive and print a copy out and keep it in a safe location. You should also keep your copies of wallet.dat as if you get your computer crashed you are ought to loose your bitcoin purchase, it is same as you loose your money wallet you cannot get it back.

Obtaining bitcoins is a relatively easy process. The three common ways are:

– If you are selling a good, you can accept bitcoins as a form of payment.
– You can purchase and sell bitcoins through Bitcoin exchanges.
– You can trade bitcoins for traditional currencies of countries.

Where can you use them?

There are a few online sellers who accept payments in the form of bitcoins like the other payment modes of credit cards, debit cards, internet banking etc. You can also sell your owned bitcoins on online trading exchanges for USD which can be further converted to your local currency. Bitcoin is slowly gaining popularity and very soon you could see it as a mode of payment even for local transaction. There was a news very recently that a mansion was sold against a payment of bitcoins. However there are such unconfirmed news doing the rounds seen after bitcoin has made its presence felt.

Bitcoin_accepted

Some online purchase website also accept bitcoin as mode of payment like the visa and master credit cards.

Very soon we will see the central banks taking stance against/for bitcoin, the unregulated, decentralized virtual currency as they cannot just ignore the bitcoin phenomenon.

Note : Trading or dealing in virtual currency carries its own risk as it is not governed or carries any recognition in the real world so think before accumulating such instruments.

 

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