Bitcoin is the virtual currency that has now been around for a few years. BitCoin cryptographic money which only exists within the internet as binary code and allows for the valid monetary transactions between organisations and individuals without any central control. These Bitcoin transactions are beyond the reach of the existing banking cartel who has a stranglehold on the world economy.
While I can’t see Bitcoin replacing fiat currencies (i.e currencies backed by governments), as BitCoin is not something tangible in the real world. This because BitCoin is not backed up by high value physical assets such as gold or property (currency your classic bricks and mortar). Rather the replacing them, I see Bitcoin working alongside these fiat currencies for the foreseeable future. What Bitcoin can certainly do, is provide an alternative replacement currency to money that’s already in circulation.
One thing that concerns me, is what will happen if existing fiat currencies were to collapse tomorrow. This is because the value of Bitcoin is linked to the existing real world fiat currencies namely the Euro and the US dollar. While the Bitcoins system caps the total number of potential Bitcoins at 21 million, to guard against inflation and ensure a rising currency value, this value is ultimately linked to the value of existing fiat currencies when you redeem your Bitcoins into these currencies to do business or or move it into a what could be considered a more secure, central bank type of account. Which brings me neatly, to my second concern with using Bitcoin, namely security.
Over the last couple of years, several Bitcoins exchanges have been hacked and the clients’ Bitcoins stolen. Such attacks and thefts will only increase as the popularity of Bitcoins becomes more widespread. Unlike the Central Bank there is no guarantee that you will get all or even some of your money back.
What is needed now is for businesses to implement Bitcoin as a means of their handling business of sales transactions. This is entirely feasible today. Businesses can make huge savings by bypassing bank charges and transaction charges as imposed by payment processing organisations such as PayPal, who charge exorbitant transaction fees. Bitcoin gets rid of these skimmers. The European Central Bank (ECB) recently, produced the first official central bank study of the decentralized cryptographic money known as Bitcoin. They obviously see BitCoin potential to undermine manipulation of the ecomomy.
Here are a couple of links to learn more about Bitcoin,
to MTGOX, a BitCoin exchange that hosts online BitCoin wallets as well
and to BitMit where you can buy stuff with you Bitcoins.