No account? Sign up

Get Breaking News, Trending News, Informative news weekly

Bitcoin basics: A breakout cryptocurrency
close

Were adding new stuff like this all day long

Like us on Facebook to stay on top of new trending and useful updates just like this one.

I'm already eProfits fan! Please
close

Were adding new stuff like this all day long

Follow us on Twitter to stay on top of new trending and useful updates just like this one.

I'm already eProfits follower! Please
close

Were adding new stuff like this all day long

Like us on Google to stay on top of new trending and useful updates just like this one.

I'm already eProfits fan! Please
close

Were adding new stuff like this all day long

Follow us on LinkedIn to stay on top of new trending and useful updates just like this one.

I'm already eProfits follower! Please
close

Were adding new stuff like this all day long

Follow us on Pinterest to stay on top of new trending and useful updates just like this one.

I'm already eProfits follower! Please
Use your keyboard keys ( ) to browse more stories.
More stories

Bitcoin basics: A breakout cryptocurrency

From bartering, to gold, to banknotes, to credit cards, to PayPal-- is bitcoin the next phase in the evolution of c...

Bitcoin basics: A breakout cryptocurrency

From bartering, to gold, to banknotes, to credit cards, to PayPal-- is bitcoin the next phase in the evolution of currency? The peer-to-peer payment system and virtual currency has been grabbing headlines in recent years due to its system-bucking lack of centralisation, investment potential, and volatility. Are we witnessing the next stage in commerce?  Could bitcoin be democratising financial activity for the communications revolution, or is it just a blip (albeit a substantial one) in a system that will always be run by the banks?

 

No middleman

Much of what makes bitcoin so appealing is that it bypasses the necessary-but-annoying institutions that take a little piece of the action every time you buy something, exchange currency, and send or receive money, especially online. We love the ease of the digital age, but decry that there always has to be someone who takes a cut simply because they control the means of payment. I’m talking about banks, online payment systems (PayPal, Moneybookers), currency dealers (Forex), and other financial services like Western Union.

 

Naturally, there are still expenses involved in the “mining” of bitcoins and their transactions, but being a virtual currency, these costs can be measured mostly in labour, computing power, and the electricity needed to run servers with bitcoin software. Transaction fees are often non-existent for small amounts and relatively low for those that draw from many different addresses.

 

The peer-to-peer aspect of bitcoin means that anyone can contribute their computing power to facilitate transactions and get new bitcoins into the system. Bitcoin mining (adding transactions to bitcoin’s public ledger) can be done faster in mining pools, in which multiple users form a block and split the profits according to how much processing power they contribute.

 

Image Source

 

Bitcoin’s benefits: a “bit” overblown?

It has just been revealed that a single anonymous miner (or mining pool, rather) has repeatedly and for “sustained periods of time” provided 51% of bitcoin’s network power. This essentially means that bitcoin is not as decentralised, “democratic”, or secure as touted. A huge advantage of bitcoin’s intended decentralisation is that one entity cannot control transactions in terms of fees, timing, or flat-out denying service. GHash, the 51% holder in this case, may not have done any of these things, and only held a majority of bitcoin’s power for 12 hour stretches, but the potential for malicious behaviour is there.

 

While bitcoin may not be a revolutionary democratisation of financial transactions, its use and appeal are growing. Travel giant Expedia has decided that it will accept bitcoin as payment for hotel bookings on its US site. A UK broker also announced recently that it will accept bitcoin for payments on property purchases. In technical terms, bitcoin purchases bypass restrictions on foreign currency exchange, like those imposed on residents of mainland China, who are clearly the main target of the move.

 

Image Source

 

Restrictions

China already severely restricts bitcoin use, while a number of countries have begun to crack down on bitcoin transactions under either tax or money-laundering legislation. The United States Internal Revenue service now treats bitcoin as property for tax purposes and bitcoin miners are subject to income tax on all profits, according to self-employment regulations. Japan, where the so-called cryptocurrency may or may not have been invented, so far has no laws regarding its use.

 

Image Source
 

As with many technological and social changes, there are those that resist or are overly sceptical. These are the people the financial institutions are “banking” on. On the other hand, there are the gung-ho bitcoin enthusiasts, who can be anything from opportunistic venture capitalists to ideological activists embracing anything they see as anathema to the banks. Regardless of the potential challenge it poses to the financial establishment, it should be noted that using bitcoin is not so simple for the common folk of the world and requires a significant bit of knowledge and equipment. This may be the most effective restriction against bitcoin use.



 

Use your keyboard keys ( ) to browse more stories.
© 2017 eProfits.com All rights reserved.