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Digital Currencies: Bitcoin

An Electronic currency (also known as e-currency, e-money, electronic cash, electronic money, digital money, digital cash, digital currency, cyber currency) is money or scrip that is only exchanged electronically. Typically, this involves the use of computer networks, the internet and digital stored value systems. electronic funds transfer (EFT), direct deposit, digital gold currency and virtual currency are all examples of electronic money. Also, it is a collective term for financial cryptography and technologies enabling it.

Bitcoin is an decentralized electronic cash system using peer-to-peer networking, digital signatures and cryptographic proof to enable irreversible payments between parties without relying on trust. Payments are made in Bitcoins, a digital currency issued and transferred by the Bitcoin network. Nodes broadcast transactions to the network, which records them in a public history after validating them using a proof-of-work system. Bitcoin is a new form of electronic money.  It’s already become “the gold standard” of digital currency. Based on some old technologies, and some new technologies, Bitcoin is the result of combining the very state of the art in cryptographic security, plus  the idea of a limited quantity commodity similar to gold and silver (where there’s only so much of it) and using it as money, plus  the idea of massive numbers of computers connected by the internet forming a strong, resilient, indestructible peer-to-peer network.  It’s called a cryptocurrency.

  • Bitcoin is the world’s first completely decentralized currency.  This means it has no issuing entity therefore, no single point of failure.  In many ways Bitcoin is more secure than a bank.  If a bank were to fail, customers money could be gone forever.  The Bitcoin network is made up of millions of computers all over the world, connected via the internet.  The entire Internet would have to go away, in order for the Bitcoin network to fail.
  • As easy as sending an email.  Just one click.  Bitcoin payments are sent with one click – just like email.  And transactions are always as free and as fast as email.
  • Zero transaction fees.  In the United States, merchants pay 45 billion dollars per year in credit card transaction fees.  And for what?  So that the transactions can be reversed as “chargebacks” up to six months later?  That doesn’t seem fair at all.  Bitcoin transactions are free.  Whereas credit cards and other online payment systems typically cost 3-5% or more per transaction, plus various other exorbitant fees…  Bitcoin usage and transactions are always free.  It doesn’t matter if you send $0.01, or $1,000,000.00,  the transaction cost is always free.
  • No such thing as a chargeback.  Payments are irreversable.  No matter whether you accept Bitcoin payments for your business or otherwise, payments can not be reversed.  There’s no such thing as a “chargeback”…  No way to get a “bounced check”…  No “reversed transactions”… Not with Bitcoin.  Payments can only be “refunded” if and when the recipient, voluntarily, as a separate new transaction, decides to send the money back.  This protects merchants from fraud.  Credit cards and PayPal can, and often do, reverse transactions up to six months later.
  • As anonymous as you want it to be.  Just like with cash, transactions can be totally anonymous.  Transactions are only identified by your Bitcoin address, and you can have as many Bitcoin addresses as you want.  You create another new Bitcoin address with one click any time you want to.  Bitcoin transactions can be made to be anonymous
  • Financial privacy.  Gone are the days of “Identity theft”.  In the old days, credit cards required merchants to have proof positive of your identity in order to shop there.  Because a Bitcoin address can only be used to receive money, and it cannot be used to extract money… with Bitcoin, the merchant only needs to know two things:  Did you pay? and,  Where do you want your stuff sent to? Isn’t that the way it should be?  Does your banker really need to know what you buy online?
  • Your account cannot be frozen. No one can freeze your account and keep your money.  (as long as you keep control of your bitcoins yourself and don’t keep your bitcoins in an online bank or wallet service.)
  • No big brother.  Third parties can’t prevent or control your transactions.  Transfer money easily through the internet, without having to trust middlemen; no central bank, nor central authority.
  • No censorship of who you’re allowed to send money to.  No more blocking who you can make payments or donations to… just because someone doesn’t agree.
  • It’s not a bank.  It’s not a paypal.  What may be the best feature of all?  “Bye bye, PayPal.”   “Bye bye, Bank.”
  • More secure than online banking existing in the world today.  Traditional banks use encryption when you log on to your online banking.  The cryptography technology used in Bitcoin is even more secure.  In other words, if it were to ever become possible to hack in to it…  Then ALL the world’s banking would be compromised.  With today’s known technology, experts all agree…  It is absolutely un-hackable and un-breakable secure
  • Bitcoin is transparent and verified.  Bitcoin is a free open source software (FOSS) project, which means it has total transparency.  Millions of programmers all over the world see every bit of the program’s source code.  They constantly monitor it, study it, and report on it…  to verify that there are no flaws or irregularities.
  • Send payments to anyone worldwide.  Bitcoin has no artificial national boudaries or limitations on where money can be sent, or on how much, or how little, can be sent.  You can now use Bitcoin to shop online for millions of items, or make a donation to a charity or organization, and you can even make purchases at physical stores, shops, and restaurants that now accept Bitcoin… using a free app or any device with a web browser.
  • No central bank…  No privately-owned Federal Reserve central bank can print more money for themselves… not Bitcoin anyway.  The value of each Bitcoin does not go down when the privately owned corporation known as “The Fed” decides to print more dollars.  In fact, it might even go up in value… as it triggers more people to seek out alternatives to storing their money in the world’s fiat currencies.
  • There will never be more than 21 million Bitcoins.  The number of Bitcoins is limited by the design of the network.  This number can never be increased.  Also…
  • Bitcoins are virtually infinitely divisible.  Currently, Bitcoins are divisible up to 8 decimal places.  For example, you can send someone 0.00000001 of a Bitcoin.  In the future, as the value of Bitcoin goes up, you might be sending your favorite coffee shop 0.00000003 Bitcoin for that cafe latte.  Also, in the future, Bitcoin could become even more divisible, if needed… as the value of one Bitcoin becomes larger and larger.
How much is a Bitcoin worth?

The value of a Bitcoin (as measured in US Dollars or any other currency) is determined by the automated online markets.  These markets operate 24 hours a day, 7 days a week, 365 days a year.  They match buyers and their “bid prices”… with sellers and their “asking prices”… automatically.

Normally, what we call the “value of a Bitcoin” is simply the last amount a Bitcoin sold for on one of the major markets (or an average of several).

[bitcoinchart currency=”USD”]

Can I exchange Bitcoins for normal cash?

Absolutely!   24 hours a day, 7 days a week, you can sell Bitcoins…

What else can I do with Bitcoins?
  • Sell Them – exchange Bitcoins for ordinary Cash any time you want,
  • Hold onto Them – and watch them grow in value,
  • Spend Them – shop with Bitcoins for products and services you want, or
  • Donate Them – donate to chaities and causes that are important to you
  • Accept Them – accept Bitcoins for payment in your business no matter what you sell

Bitcoin is absolutely ideal for charitable organizations that are doing amazing great work in the world.  People can donate with one click.  People can donate tiny amounts, or large amounts, with no transaction fees.  And, of course, many small amounts really add up!