Trade today is not limited by national borders. Trade occurs at an international level as well. Currency plays a huge role in international trade. The term currency immediately brings to our mind the two most important forms of currency which are in the form of coins and paper currency. Is there any other completely different type of currency apart from the ones mentioned above? Well, there certainly is and it is known as bitcoin. In simple terms, Bit coin refers to digital currency which is generated as well as held electronically. Satoshi Nakamoto (who was a software developer) was the first individual associated with the currency.
Like other currencies, bit-coin may be used to purchase things. Its value may vary as well. But it has to be understood that bitcoin is not a currency belonging to any particular region or nation and in this sense it may be called as an international currency. The most notable characteristic of bitcoin is its decentralised nature, meaning it is not controlled by any single institution. Unlike other currencies bitcoin is not subject to banks or governments. Bit coin is similar to gold in certain aspects, namely the difficulties involved in its production, supply and recognition.
If you are wondering who prints bit coin, then the answer is nobody as it is not printed physically but generated digitally instead. This currency is mined in a distributed network with the help of computing power. It could be said that bitcoin has its own payment network as in this network the transactions are processed which are carried out with virtual currency. There is certainly an upper limit to the amount of bitcoins that may be mined. The mathematical formula (freely available) is used in the software programs to create bitcoins. Bitcoin is a decentralised currency and whichever machine mines bitcoin as well as processes the transaction simply becomes the part of a global network.
Another major advantage of bit coin is the ease of holding and transacting the currency. No questions are asked or no fees are required for a bitcoin address to be set up. Also, multiple addresses may be held by the users with no personal information required. Transparency is yet another important characteristic of bitcoin as the big version of general ledger which is termed as the bloc chain shows each and every transaction that took places in the network.
Other features of bit coin include the speed at which transactions may be effected. Transaction fees are also relatively low. Bit coin is presently divisible up to eight decimal places. The storage of the bitcoins which are bought is done in the digital wallet which is on the computer of the user. For the purpose of exchanging online credits for the products as well as services, the bitcoin system may be used in case of certain retailers and contractors which allow this payment method. Bitcoin is automatically transferred from the buyer to the seller directly via an encrypted process. In addition, the transactions are irreversible. The demand and supply in the market determines the exchange rate for bitcoin with respect to other currencies. The maximum number of bit coins which may be in existence is twenty-one million.