Bitcoin is an online system which allows online payments to be made which doesn’t need to have a trusted authority to act as a third-party within the transaction. For example when people want to make a payment to an eBay seller they would use PayPal. The user would make the payment through PayPal which would be sent to the seller in order for them to receive payment for the purchase, in which they would usually add a fee for doing the transaction if you are a business. What makes bitcoin unique is that it is decentralized meaning that nobody controls the bitcoin network and instead uses specialist software to verify the transactions.
People are able to send bitcoin anywhere in the world without any authorisation or confirmation from a bank giving people freedom with money without limitations. Another benefit of bitcoin is that it can cut a transaction from 3 working days to within a few minutes which gives business a quicker platform to work from. Bitcoin is able to avoid inflation, with physical money banks are printing money depending on what they need for example to pay off debts while bitcoin prints a certain amount of coins per day which means the more people who get involved with Bitcoin the higher the value of the coin will be meaning that it is a good investment if the users increase over time. It has been said according to bitscan.com that over 31 million transactions as of 10/02/2014 have happened using bitcoin meaning that is still increasingly popular since it first came out in 2008.
The negative of bitcoin is the limited amount of places that you can spend it with roughly around 150 online retailers in the UK which accept bitcoin. It has potential to become the go to method of transaction for e-commerce but it has not, in which some individuals is now beginning to feel it has been overhyped. Another negative of the bitcoin service has been when people began to back out of using it after the founding member of bitcoin and CEO of BitInstant exchange was arrested on chargers for laundering money. This in turn meant that big companies such as Apple removed the payment method from their app store. Bitcoin also has the disadvantage of lack of buyer protection meaning that if a company does not provide the customer with the product after a bitcoin payment, then the customer will be unable to ask for a refund or to reverse the transaction due to bitcoin being pretty much ungoverned. There are companies which act as the middle man to prevent this but then this also takes away from the beauty of bitcoin being what it is.
One incident which used the bitcoin was Mt.Gox, a company which was based in Japan and was a bitcoin exchange. The company declared ended traded and filed for bankruptcy, and then when the company was being liquidated it became apparent that 850,000 bitcoins were missing with only 200,000 being found. It is believed this was due to many factors such as theft or poor management of the company. Another instance in which an individual had loss money due to Bitcoin was the BitcoinTalk user Allinvain who was one of the first individuals to suffer a major loss of which was 25,000 bitcoins that were taken from his wallet after hackers managed to get onto his computer.