Bitcoin: A Peer-to-Peer Electronic Cash System
In today's fast-paced world, a unique innovation is redefining how businesses and consumers participate in the economy. Bitcoin, a revolutionary type of currency, is attempting to change the course of traditional financial transactions. Do you buy or sell goods and services over the Internet? Do you conduct international business which involves multiple types of currency? If so, using Bitcoin may affect how you conduct business or make purchases. You may contact our law firm to speak with an attorney who can explain the legal intricacies of this new currency and how it affects your circumstances.
Bitcoin uses peer-to-peer technology in order to operate. It is fully open-source and is not regulated by a central authority or financial institution (e.g., bank). Accordingly, Bitcoin is similar to cash for the Internet. So, anyone can own and use Bitcoin. Indeed, since this system is a public network, users can launch their own versions of the currency at any time. For individual users, Bitcoin provides a level of security that does not exist with payments using credit cards. Users can be part of entire transactions without revealing their identities. It is designed to allow users to send and receive payments with an acceptable level of privacy. However, Bitcoin is not anonymous and cannot offer the same level of privacy as cash. So, in reality the use of Bitcoin leaves extensive public records.
This new currency also provides advantages for businesses. For instance, since Bitcoin payments are irreversible, businesses do not bear the cost of fraudulent payment attempts. In addition, with the ability to transfer this type of currency internationally in a few minutes, foreign transactions can move at a much faster rate.
Although compelling, this new payment option is subject to controversy. The general rules of economics dictate that for a currency to be successful, it must be able to maintain its value. To be functional, consumers must also be able to transfer the currency and the currency's value must be universally recognized. For example, five dollars is worth the same everywhere in the world, even though its purchasing power varies. However, Bitcoin contradicts the general rules. Since this type of currency is not regulated by a central authority or affiliated with any financial institution, there is no independent organization to support its value. Hence, throughout its history, the value of Bitcoin has fluctuated dramatically, from being worthless to rising towards high values. Still, supporters argue that a fluctuating currency can be successful because in today's cyber world, goods and services can be linked to fluctuate with Bitcoin. It has been suggested that there are ways to make money with Bitcoin. For example, mining, speculation, or running new businesses are some forms. Nonetheless, businesses especially those that conduct international transactions remain cautious of Bitcoin. There is a risk of loss if Bitcoin drops in value for any period of time.
For more information, you should consult with an attorney. At our law firm, we assist clients in legal matters involving the latest technology advancements by staying informed and using knowledge to create solutions.