What you need to know about Bitcoin

Do mobile wallets and digital currency make you nervous or have you stashing boxes of cash under the floorboards? That might be a bit extreme, but caution and concern about security is certainly not a bad idea.

What is Bitcoin?

Basically, Bitcoin is a digital currency that doesn’t require any central bank or middle man. Cryptographic techniques ensure Bitcoins are transferred securely and the money is real. Because Bitcoins are not tied to a specific country, subject to regulation, or credit card fees related to them, they can make international purchases less expensive. And many merchants are accepting Bitcoins for payment, even Yelp now has a category for businesses who accept Bitcoins. Some businesses just buy up Bitcoins hoping they’ll go up in value.

Anonymous spenders

Bitcoin has been around since 2009; the creator goes by alias Satoshi Nakamoto, whose real identity is unknown. The creator isn’t the only mystery surrounding Bitcoins, transactions, although saved in a public log, never reveal the names of buyers or sellers. This means that people or businesses can basically buy or sell anything without having it tracked back to them. Even with a limited imagination, you can guess what kind of businesses Bitcoin might be most interesting to.

Security flaws

The recent news about Bitcoin’s protocol flaw, leaving it open to fraud, left the price for Bitcoin plunging. The flaw itself allowed criminals to make it look like the transfer of Bitcoins into an account never happened, meaning multiple payments could occur with only one actually be logged.

The future of Bitcoin

The future for Bitcoin may hold regulation and taxation, governments are concerned about their lack of control. As more Bitcoins get into circulation, no doubt some changes will be made. Current users of the currency enjoy the lack of central control, but that might not be a sustainable model.

It remains to be seen if digital currency can really compete with cash, but for now, it’s trying. What do you think? Do you use Bitcoins? Would you?