Bitcoin is a currency created in 2009, but unlike dollars, it is decentralized. Meaning, it isn't controlled by government, banks, or other persons or organizations. This open source, instant payment currency is tracked online, so anyone in the world can use it.
Bitcoin should not be confused with digital payment networks such as Apple Pay or PayPal. These networks access your debit or credit accounts, which is not historically a Bitcoin feature.
How does Bitcoin work?
You can store bitcoins digitally in an app or software or print a record. Different wallets (applications on smartphones or computers) have different levels of security. Choose your wallet.
Bitcoins may be used to purchase goods and services as long as a retailer accepts them. You can also transfer them between users.
What are the benefits of Bitcoin?
These features distinguish Bitcoin from other currencies:
- Easy cross-currency transactions: There's no need to exchange bitcoins for foreign money because it's universal.
- Transparency: All Bitcoin purchases are recorded in a public ledger. Therefore, there are fewer hidden fees and fewer opportunities for fraud.
- Low fees: Bitcoin operates with little to no fees. The small fees sometimes imposed support faster transactions. This is good news for small businesses who have to pay fees when customers use credit cards.
Are there risks with Bitcoin?
Bitcoin is unregulated and remains vulnerable to certain risks, such as:
- Hacking: The Bitcoin cryptographic code is strong, but some hackers have accessed users' online wallets. Software or paper wallets are more secure.
- Volatility: The Bitcoin market remains explosive. Because so few people use it, small transactions can greatly affect its value, making Bitcoin a riskier investment.
- Lack of security: No regulation means little chance of recovering lost or stolen money.