An Introduction to Bitcoin System of Payments

Bitcoin is a digital currency system used for payments in electronic transactions. Whether you are buying or transferring money to interested parties, online, using bitcoins does not involve movement of physical cash. Every transaction that you realise is recorded electronically in the Bitcoin payment system; this log of transactions is referred to as blockchain in Bitcoin parlance.
Bitcoin is in nascent stage of adoption, but the number of companies (online and tangible) willing to accept the payment system is steadily growing. While the payment system remains complex for many, the benefits of bitcoins over conventional currency entice many to adoption.

Characteristics of Bitcoin Payment System

Bitcoin currencies (called bitcoins) have varying values. Their values rise or fall similar to traditional currencies. The change in value depends on the fast or slow movement (supply/ demand) of the currency. But, unlike traditional currencies, there is no regulatory authority to decide the value of a bitcoin. Often, in a transaction, buyers and sellers using bitcoins settle on a value beforehand depending on the prevailing value of the digital currency.

If you are considering using Bitcoin payment system, obtaining the currency shouldn’t be difficult. There are several exchange houses dealing in bitcoins. You could also trade your conventional local currency or other country currencies for bitcoins.

Why bitcoins are Popular

• Money can be moved between interested parties across countries within minutes, any time
• Bitcoin currencies offer both buyer and seller the convenience of transacting in a currency other than cash. It doesn’t therefore become a necessity for the buyer to have access to cash always to pay for his or her purchase.
• As physical cash is not involved, the seller can be free from the worry of ending up with counterfeit notes.
• When compared to credit cards, bitcoins are not accompanied by charges such as transaction fees for sellers; even, if there are charges, they are meagre, which makes the currency attractive for sellers.
• Every transaction is meticulously recorded for the ready view of buyer and seller, which lends greater transparency. This high degree of transparency reduces risks of frauds for both buyers and sellers.
• Bitcoin payment system uses cryptography design to ensure security of currency. This design presents lesser chances of the currency being counterfeited.
• Buyers need not divulge any personal information in Bitcoin mode of payment. Thus, there is no risk of putting personal information to risk online.

Opinions on the future of Bitcoin payment system are varied. Advocates of Bitcoin feel the technology is still nascent but would be more in demand with time. Sceptics however associate the anonymity inherent to Bitcoin with risks such as money laundering and illegal trading of goods.

What are your views on bitcoins? Is it here to stay? Share your thoughts here.