![]() īitcoin has properties which could make it important in commerce, the most significant being low transaction costs. However, this freedom along with increased interest and adoption from users means that it may aid and “facilitate money laundering, tax evasion and trade in illegal drugs and child pornography”. The freedom of Bitcoin may also allow organisations such as WikiLeaks to be funded and to carry out business with fewer restrictions. ![]() This in theory should create an incentive for all users to protect the Bitcoin network. Therefore “each participant is obliged to maintain the entire transaction history of the system rendering all transactions transparent”. The Bitcoin system utilises a peer-to-peer network of all those who are involved in creating and trading Bitcoins, to process and check all transactions. Due to the decentralised nature of Bitcoin, the network is instead controlled by its users. In addition, Bitcoin is not linked with any type of commodity, for example, gold or silver. įrom a wider perspective, Bitcoin is not currently controlled by a central governing body, reducing privacy concerns. In short, the high liquidity, reduced costs and the high speed of Bitcoin’s partially anonymous system are what make this currency so interesting. states that this is because supporters of Bitcoin see it as “an ideal currency for mainstream consumers and merchants”. At the end of August 2013, the total available Bitcoins were valued at over 1.5 billion United Stated Dollars (USDs), and in December 2013 the processing power of the Bitcoin network was claimed to be “roughly 300 times the combined power of the top 500 supercomputers”. Interest in Bitcoin has grown at an increasing pace in recent years. Bitcoin transactions are non-reversible-they are “computationally impractical to reverse” and can help to reduce fraud. This kind of system is based on trust, however these checks come at a price in the form of increased transaction costs, meaning that we often see restrictions in the form of minimum spend limits for electronic payments-i.e., on credit or debit cards. In other words, payments for online transactions must go through a company, such as a bank or credit card issuer, to be checked for factors such as fraud and successful payment. ![]() noted that buying and selling online has become reliant “almost exclusively on financial institutions serving as trusted third parties to process electronic payments”. Introduced and first documented by Satoshi Nakamoto in 2009, Bitcoin is a form of cryptocurrency-an “electronic payment system based on cryptographic proof”, instead of traditional trust.
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