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The Basics of Bitcoins
Bitcoins are a form of electronic currency that can be used in peer-to-peer transactions of all types. Unlike PayPal, for instance, Bitcoins are not actual US currency, but rather a currency alternative. To gain a better understanding about this exciting, yet controversial form of currency, it is important to learn more about the history of Bitcoins, what they are used for, and what the future may hold. The History of Bitcoins
The concept of the "Bitcoin" came about in 2009 when the open-source programming to operate the system was created by a developer or development team under the pseudonym of Satoshi Nakamoto. It is a cryptocurrency, because the programming uses high-tech cryptography during the creation and transfer process. The first transaction using Bitcoins is believed to have been for a pizza in 2010. By 2011, there was significant interest in the concept. Since Bitcoins are a form of currency, there is a fluctuation in their value, in comparison to the U.S. dollar or other international currencies. According to statistics published by BlockChain, there are over 12,000,000 Bitcoins currently in circulation.
What Bitcoins are Used for Today
Bitcoins have received a mixed reaction from both economists and retailers alike. Very few large, established merchants accept them today. However, they can be used at Overstock.com and Zynga.com. There are also a number of small retailers on and offline that have begun accepting this form of currency—helping to keep the market vibrant and alive. However, the usage of Bitcoins for online gambling has sparked controversy. This has allowed some websites and gaming companies to bypass certain gaming laws. The use of Bitcoins for these purposes has caused several international governments to look into the currency, and in some places, even go so far as to attempt to block their use.
While only time will tell what the future holds for Bitcoins, right now the currency is growing and being adopted by more organizations than ever before. One thing that is holding back growth is the instability of it. Early on, the value of the currency rose from .32 cents to $32 before dropping back to $2.00 and has since risen to the current value (as of 12:37 pm January 25, 2014) rate of $809.00. This dramatic fluctuation in rates has made it difficult for a firm to feel confident about accepting large currencies, since there is always the fear that prices will drastically drop. If international governments allow the continued use of Bitcoins, it may it become a highly traded commodity that is accepted worldwide.
Understanding the concept of Bitcoins is the easy part—figuring out how to make them part of your financial decision making process is much more complex. Before you decide to purchase, use or accept Bitcoins, you should research the market extensively and make certain you are prepared for fluctuation.
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