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October 22, 2018, 03:00:26 PM |
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Bitcoin is a form of digital currency which allows performing transactions without the need for a central bank. Bitcoins can be used to purchase goods and services from vendors who accept them as a mode of payment. Bitcoins may be transacted with other bitcoins with the help of peer-to-peer technology carried out by the network. Since they are open source, their design and control is open for all. Traditional currencies are managed by the central bank, while bitcoins are not regulated by any authority; instead, they are maintained by an online community. Since bitcoin is not a country-specific currency, international payments can be carried out more economically and efficiently. Bitcoins can be transferred among people using mobile apps on smartphones or computers. Bitcoins are stored in a digital wallet that may exist on cloud or physical storage of the user.
The unregulated nature of bitcoins has been instrumental in proliferating demand in the market. Increasing spread of wireless communication and rising number of online transaction activities could drive the market over the coming years. However, security threats and rising criminal activity may pose a restraint for the market’s growth. Government regulations could serve a challenge for the growth of the market. For example, the Internal Revenue Service (IRS), a U.S. Government agency, laid down regulations to tax all virtual currencies including bitcoins as a property rather than as currency. Thus users will have to maintain a record of all bitcoin purchases made over the period of one year. This would negatively impact the market due to the increased accounting complexity.
Small businesses may use bitcoins as there are no credit card fees. People may also buy bitcoins as an investment. Bitcoins are available in the marketplace for people to buy and sell using different currencies. Bitcoins can be used to purchase merchandise anonymously. Transactions are recorded in a public log wherein names of buyers and sellers are not disclosed. Thus, users can buy or sell anything without being easily tracked to the item they purchase. This has made the use of bitcoins lucrative for people wanting to buy drugs online or carry out illicit activities such as fund transfer.
The bitcoin market in Europe is slated to suffer setbacks due to a recent directive by the European Banking Authority ordering banks not to hold, buy or sell virtual currencies until financial authorities devise a way to regulate them. In North America, recent regulations have impacted the market; however, it is still expected to be the hub for market growth owing to a large number of bitcoin mining activities in the region. Market participants include ANXBTC Bitcoin Exchange, Expresscoin, Coinbase Inc. and BitPay among others.
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