If you’ve been following the news, you’ve probably heard a lot about bitcoin, some of it good, some of it bad. But what is bitcoin exactly? The concept is a bit difficult to grasp, but here goes.
In a nutshell, bitcoin is a digital currency (aka cryptocurrency). Unlike most currencies, it is not backed up by a government, which many people view as favorable, since it means it won’t be subject to manipulation. For example, nobody can randomly create new bitcoins and deflate the value of the currency, which is a trick that many governments use to create money they can spend. Instead, new bitcoins are mined by computers all over the world, and the rate of bitcoin creation is already set at a rate that is known by all.
The second thing that differentiates bitcoin from other currencies is that it totally cuts out the middle man. When you use a check or credit card, there is always a middle man (a bank or financial institution) that makes the transaction possible. The problem is that for facilitating the transaction, these middle men usually take a fee (called a transaction fee), thus taking a slice out of every transaction that occurs. With bitcoin, the payment is peer-to-peer, and therefore there usually are zero or close to zero transaction costs.
Lastly, bitcoin can be used in an anonymous way if you know what you’re doing. This is not the case with things like credit card payments, where your name and address will be inextricably tied to every transaction you make. It’s important to note, however, that anonymity isn’t automatic when you use bitcoin. You’ll have to be an advanced bitcoin user and understand how the system works before you’ll be able to ensure complete anonymity. It’s this feature, perhaps, that has made bitcoin popular among online casinos and poker sites, many of which began accepting bitcoin deposits a couple years ago. You can find a list of bitcoin poker casinos at websites like www.bitcoinvideogame.com.
As you can see, bitcoin has many benefits, and resembles cash in many ways. But using bitcoin does come with a set of risks as well, so it’s important to educate yourself before you engage in any bitcoin transactions.