Created in 2008, bitcoins are a virtual currency that has grown in popularity and use over the last several years. In exchange for cash currency, bitcoins can be bought and sold although each transaction is done through a system of user names. This anonymous method of collecting and gathering financial transactions is being touted as the next revolutionary currency and the next opportunity for criminal activity.
Danger Associated with Bitcoins
Due to the anonymous nature of the bitcoin process, there is potential for the currency to be used for illegal sales and purchases. In addition, the bitcoin process is irreversible, leaving the consumer open for theft and loss.
Bitcoins are stored in a virtual wallet that can be lost (or stolen), similarly to how an actual wallet can be misplaced or taken. The virtual wallet is a collection of the bitcoin keys – identifying keys that show ownership of the coins. These wallets can be stored on a desktop or in a cloud storage system. Recent news stories have reported instances where computers were disposed of with thousands of dollars of bitcoin – indicating the high level of finances that have been transferred into the virtual currency.
Traditional banking institutions have been slow to engage in transactions with bitcoin – in part due to the illegal activities that have been taking place with the virtual web. In recent years, however, protocols for using the virtual currency have been developed and banks have begun to accept the currency in the same way that one would use credit cards.
The future of digital currency is unclear, but with each new development, the global economy of bitcoin seems brighter. There is a huge potential for growth and opportunity for retail business. Only time will tell how government regulations affect the sale and use of the virtual currency.