In layman’s terms, bitcoins are a form of digital currency which is used to purchase goods online or to carry out online transactions.

Every single bitcoin transaction is digitally recorded on a transaction log known as a “Blockchain” of which keeps track of all transactions carried out and of the amount of bitcoins owned by users. These transactions are verified by “miners” who receive a fee from the merchants and/or vendors taking part in the bitcoin transactions. This is one way of obtaining bitcoins with other methods including trading, gambling and accepting payments and tips in bitcoin.

The start of Bitcoin

When Bitcoin was launched in 2009, the big question was “How long would this craze last?” Many people believed that Bitcoin was a passing trend and that the bitcoin bubble would burst long before it would have any real effect on trading and the economy in general. However, Bitcoin has proven the naysayers wrong and continued to grow in both popularity and value. Many large companies have announced that they will accept bitcoins as payment for goods.

Here to stay

Now with many years down the road, it would seem that bitcoins are here to stay and consideration must be given to its long term effects with the big question now is – “Can bitcoin co-exist with fiat currency?” In the first instance, it’s important to note that bitcoins carry a value just like any other currency. However, because there is no centralized institution to govern it, its value is based on the principle of supply and demand and can fluctuate considerably. For this reason, Bitcoin trading is open to much speculation as to when is the correct time to buy or sell. Nevertheless, bitcoins and actual currency can be used together in harmony.

Accepting Bitcoins for transactions

A seller of goods online can have the option of accepting Bitcoins as well as cash or credit cards if they so wish. The advantage of accepting bitcoins is that there are little fees applicable to the transaction thanks to Lightning Network, Bitcoin represents a viable alternative to cash. Therefore, both currencies (fiat & bitcoin) can, theoretically, be used simultaneously.

However, there is one issue holding Bitcoin back at present which may have been prevented it from becoming fully integrated into everyday use, and that is the issue of security. Bitcoin transactions are irreversible which means that if bitcoins are stolen from by hackers, it is impossible to retrieve them. There is absolutely no comeback and no avenue of recourse available to you to retrieve them. That said, the next few years will be exciting as we watch the development of Bitcoin, and its security, in particular, to see if its integration into mainstream use with actual currency eventually manifest itself.