The download on Bitcoins.

March 21, 2015

erin_doan_agency 031514Good Neighbor Tips from Erin Doan, State Farm Insurance, Scottville,

Bitcoin is a currency, just like the dollars in your wallet. However, unlike conventional currencies, Bitcoin isn’t controlled by government. This “open source” currency is tracked online, so anyone in the world can use it.

Bitcoin is not a digital payment network such as Apple Pay or PayPal. These networks access your debit or credit accounts, which is not historically a Bitcoin feature.

How Bitcoin Works

You can purchase Bitcoins from individuals or online exchanges. How much you’ll pay — the current value — fluctuates. Check the price before you buy.

You can store Bitcoins digitally in an app or software or print a record. Different wallets have different levels of security. Weigh your wallet options here.

Bitcoins may be used to purchase goods and services as long as a retailer accepts them. You can also transfer them between users.

Bitcoin Benefits

These features distinguish Bitcoin from other currencies:

  • Cross-currency transactions: There’s no need to exchange Bitcoins for foreign money because it’s universal.
  • Transparency: All Bitcoin purchases are recorded in a public ledger. Therefore, there are fewer hidden fees and fewer opportunities for fraud.
  • Low fees: Bitcoin operates with little to no fees. The small fees sometimes imposed support faster transactions.

Bitcoin Risks

Bitcoin is unregulated and remains vulnerable to certain risks, such as:

  • Hacking: The Bitcoin code is strong, but some hackers have accessed users’ online wallets. Software or paper wallets are more secure.
  • Volatility: The Bitcoin market remains explosive. Because so few people use it, small transactions can greatly affect its value, making Bitcoin a riskier investment.
  • Lack of security: No regulation means little chance of recovering lost or stolen money.