Bitcoin is a virtual currency created in 2009 by one or more hackers under the pseudonym Satoshi Nakamoto. Unlike other currencies, Bitcoin does not have a central bank behind it that distributes new money but is based on two principles: a network of nodes, i.e. PCs, that manage it in a distributed, peer-to-peer mode; and the use of strong cryptography to validate and secure transactions. Bitcoins available on the network are 21 million while those actually in circulation are about 9 million. The value of Bitcoin has risen from 0 (in 2009) to $1,200 (the peak last November). According to the Financial Times, total exchanges have reached $10 billion compared to $150 million a year earlier.
How to use
In order to buy Bitcoin you need to open a virtual wallet/account after which you need to connect to the many sites that offer the virtual currency in exchange for money (payment by bank transfer, rechargeable cards). Bitcoins can be exchanged or spent (they are accepted by many businesses both virtual and physical).
Pros and Cons
– Quick and easy use;
– low transaction costs.
– Possible rating collapse;
– operator reliability.
Being a virtual money Bitcoin can be stolen (for example by a hacker attack) or lost (malfunction of the hard disk of the PC). A London-based company offers an insurance coverage tool on Bitcoin. The offer provides a kind of “safe deposit box” that protects against hackers and is also covered by insurance.
Some say no
The Chinese government has banned banks from using Bitcoin for their exchanges, to prevent money laundering risks and defend financial stability. No restrictions on exchanges between individuals, however. China is the first Bitcoin market with 35% of all global trades. Since last October, the search engine baidu.com has decided to accept the virtual currency as a payment method for various online security services.
European Union approves with reservations
The European Parliament’s EU Directive 2018/843 officially recognized cryptocurrencies, but stipulated that all providers of digital wallet services will have to apply systematic checks on their customers to end the anonymity regime associated with virtual currencies.
Jerome Powell (Fed) sees long-term benefits, but also risks
Fed Chairman Jerome Powell, while talking about long-term opportunities with reference to Bitcoin, particularly with regard to the innovation of a faster, more efficient and safer payment system, warns investors of possible risks arising from the lack of intrinsic value of cryptocurrencies.