Everything is virtual nowadays like online shopping and online banking. But, what if you find a way to do both of them without entering in your credit card information? Virtual currency is the answer. Bitcoin is a type of virtual currency that is maturing right before our eyes. Transcending the boundaries of online banking, Bitcoin does not warrant the involvement of a bank or any physical establishment for that matter. As free as clouds, Bitcoin travels with the ability to make transfers domestically and especially, internationally. These virtual currencies can help small businesses and IT specialists to discover new things. However, the biggest problem it has yet to tackle is the matter of security in exchanging these currencies.
What is Bitcoin?
Bitcoin assumes an unconventional way of exchanging money. For instance, it does not require any transaction fee or real name of the user, which is a little bit unusual, if you ask. In fact, it was created in 2009 by an alias, named Satoshi Nakomoto. It is an “open-source protocol” and does not affiliate with any union or state. It is neither regulated by the government nor insured by the FDIC as of now. Despite the unconventional nature, Bitcoin proves to be popular among merchants. You can buy anything from web hosting service to clothes and pizza.
Security provided by Bitcoin
Without a trusted third party, all Bitcoin has left to maintain security is cryptography. Cryptography helps protect the transactions by providing a private key to the owner and him only. To authorize any transaction from a fellow Bitcoin user, the owner must utilize the private key. This is the most crucial component of the safety of these currencies. Ironically, it is also the thing that is at risk. According to Patrick Murck from a lobbying group, Bitcoin Foundation, the complex cryptology is hard to crack and counterfeit. It is the private key that hackers can access as long as there is an Internet connection. And nowadays, there’s Internet connection almost everywhere. So, the possible solution is to not tell everyone you know that you indeed have Bitcoins. Otherwise, you can put your private key information somewhere physical, like a safe, where hackers cannot get access to.
Why people would prefer Bitcoin, as opposed to real money, goes along the lines of its lack of transaction fee and more fluid transference. But is it really safe though? Cryptocurrency is growing and maturing to the point that more and more people are using it. So depending on what kind of people they are, the safety issue remains in the air. Bitcoin may not recognize illicit drug activities that go on during the transactions due to the lack of regulation. However, the technology for cyber-security is becoming advanced. Just as long as you don’t advertise your private key, like putting in on your computer desktop, Bitcoin might work just fine.