A new form of online currency is making waves in trading called Bitcoin. Bitcoin is digital currency, also referred to as crypto- currency, that has no involvement with banks. This translates to the currency not being backed by any country’s government or central banks. Most all currencies depend on a third party, like a bank or payment processor, such as Visa, in order to verify transactions are sent and received. Bitcoin is decentralized currency so no specific person, not even the creator has authority over it.

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Bitcoin does not require any transaction fees, and it does not require you to give your real name. The currency was created in 2009 by an anonymous person using Satoshi Nakamoto as a pseudonym. Nakamoto shared a paper in 2008 titled, “Bitcoin: A Peer- to - Peer Electronic Cash System. The paper outlined the how and why of the bitcoin system. Without the need of a third party, bitcoins are “mined” by computer software. Transactions amongst users are verified by users and added to the untampered public ledger. Bitcoin transactions take place solely via the internet and each user possess’ at least one bitcoin wallet.

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It is important to not that there is a difference between ‘Bitcoin’ and ‘bitcoin’. Capitalized ‘Bitcoin’ refers to the software or network system. Non-capitalized ‘bitcoin’ refers to the actual digital currency. The price of the currency depends on what people are willing to pay for it. The present value for one bitcoin is approximately $4,267.47 USD. During bitcoin’s early stages, it was traded for mere pennies, going to show that the trade price has grown tremendously.

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Bitcoins can be traced, meaning that the users are no longer truly anonymous, because bitcoin service providers have started to implement KYC/AML regulations. The KYC/AML acronym stands for know your customers/ anti-money laundering, which require users to give proof of identity and residence.

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Bitcoins can be spent at many companies globally. Many companies accept bitcoins, such as Overstock, WordPress, Expedia, Whole Foods, RE/MAX, Bloomberg and many more however, many companies refuse to accept bitcoin. The reason some merchants aren’t accepting bitcoin is because there is less demand for bitcoin by consumers, which doesn’t prompt merchants to invest in the infrastructure needed to accept bitcoin. Bitcoin also makes up a low share of overall shares. An example is Overstock, where bitcoin sales only accounted for 0.0002% of its overall revenue in 2016.

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Bitcoin is also regarded as an asset that customers hold onto, in order to make money down the line, instead of spending it on goods that could be bought with other currencies. An individual could use their investment in bitcoin to buy other investments and assets like commercial and residential real estate, cars, companies, etc.

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All in all, Bitcoin is on the rise and it can be deemed a good investment by some and a risk by others.