On everyone’s lips, Bitcoin, the Internet currency, captures praise, criticism, and misgivings equally. With a number of advantages over traditional payment systems, Bitcoin presents, as a currency of its own, a somewhat darker side that has caused, for example, that Thailand has banned transactions with Bitcoin within its territory. A first step is expected to be given by other nations.
But first of all, we need to answer some questions, which will be the reason why you have arrived at this article: what is Bitcoin? how does it work? Is legal We answer, in a simple way, these and many other questions about Bitcoin, the Internet currency.
What is the origin of Bitcoin?
Bitcoin has its origin in 2009 when Satoshi Nakamoto, pseudonym of one or several people, decided to launch a new electronic currency whose peculiarity is that it only served to be able to carry out operations within the network of networks. Bitcoin refers to both the currency, the protocol and the P2P network on which it relies.
So what is Bitcoin?
Bitcoin is a virtual and intangible currency. That is, it can not be touched in any of its forms as it happens with the coins or notes, but can be used as a means of payment in the same way as these.
As with the money that we have in our bank Bitcoin increase or decrease of our personal account as we make income or expenses, the only difference is that there is no possibility to monetize them, as when, for example, withdraw money from an ATM.
What are the peculiarities that make Bitcoin different?
Undoubtedly what makes Bitcoin different from traditional currencies and other means of virtual payment like Amazon Coins is decentralization. Or, what is the same, Bitcoin is outside the control of any government, institution or financial institution, whether state or private, such as the euro, controlled by the European Central Bank or the Dollar by the Federal Reserve of the USA.
In Bitcoin the control is carried out, indirectly through its transactions, the users themselves through the P2 P (Peer to Peer or Punto-Punto) exchanges. This P2P structure and lack of control make it impossible for any authority to manipulate its value or to cause inflation by producing more quantity.
In fact, its production and value is based on the law of supply and demand. Another interesting detail is that Bitcoin has a fixed limit of 21 million coins, which will be reached in 2030.
How do they work?
To operate with Bitcoin you only have to download any of the available applications, there are multiple alternatives for any operating system, whether desktop or mobile like iOS or Android (MultiBit or Bitcoin Wallet, are just a few options).
With them, you can create your Bitcoins wallet which, simplifying, consists of a private key associated with a public key with which to perform operations. Thanks to them, Bitcoin cannot be falsified and ensure that user-to-user transactions are performed safely.
How to get Bitcoin?
There are three ways to get or buy Bitcoins. The first, and simpler, is accessing one of the Bitcoin markets such as MtGox or Bitcoin.com, which allows you to exchange conventional money, euros or dollars, for Bitcoin.
Another way is the exchange of goods with other users, that is, the purchase/sale of a lifetime but paying with Bitcoins. The last, and stranger, is ” mining .” This practice consists in using part of the resources of our computer in the resolution of extremely complex mathematical problems in exchange for Bitcoins.
Currently, 25,000 people perform this task and generate about 25 Bitcoins every 10 minutes, so this practice to get virtual currency is becoming more complicated, unless you belong to one of the colonies of miners that circulate through the network.
Is Bitcoin legal?
The legality of Bitcoin is simple to summarize ” Bitcoin is legal in that place that accepts it as a means of payment in a transaction, ” so easy and simple. Being out of control of any institution there is a legal vacuum on it.
In addition, when dealing with anonymous transactions and encrypted between two users, they are free of any commission or tax such as VAT.
What is that dark side of Bitcoin?
Decentralization and anonymity have made Bitcoin the preferred payment medium for fraudulent transactions such as the sale of drugs or money laundering. It is also the “official” means of payment for the underworld.
This has made government institutions such as the US economic crime brigade (FinCEN) no longer take a “blind eye” and want to put in place regulatory measures for operations with Bitcoins.