The concept of Bitcoins is a recent one, around 2009 to be precise but within a short span of a decade it has taken the world by storm. It will be an exaggeration to say that it will replace traditional currencies in future or even have a parallel Bitcoin economy along with the existing conventional one. But it is slowly and surely catching up. This is because Bitcoins can be used to pay for goods and services received and carry on trade and other transaction that can be done by traditional currencies.
What is Bitcoins
– Bitcoins is the oft repeated question. It is actually electronic cash that can be safely used for any trade and can be securely transferred in any volumes across countries through channels that are outside the formal banking system. Hence there is always a fear that money can be sent in secrecy to terrorists or other similar organizations. Such transactions are known as the “silk route” and have led to some countries banning trade in Bitcoins, resulting in the closure of a small number of Bitcoin exchanges. But these are few and far between and Bitcoin exchanges are now as important and relevant in today’s technology driven world as the world’s top stock exchanges.
This peer-to-peer digital currency is encrypted and just like a stock exchange in formal fiscal systems, there are Bitcoin exchanges through which one can buy or sell Bitcoins. Within its network it is deemed to be a unit of currency that is linked to a Bitcoin address. For security and safety, it takes the help of public-key cryptography in its trading. No physical tokens are exchanged. A transaction log also known as Blockchain has all the details of the owner of Bitcoins. This is as simple as it can get for an insight into the world of Bitcoins.
The next point is facilitating trade in this digital currency through a Bitcoin currency exchange. Such an exchange helps users exchange funds across the globe but without any processing or verification by agencies that are not connected to the transactions. This is due to the peer-to-peer nature of Bitcoins which is Blockchain verified.
However, a reputed currency exchange for Bitcoins will have systems in place that will safeguard the interests of the holders as well as ensure that all operational norms are within the ambit of the law of the land. If one goes through the workings of such an exchange, it will be seen that a lot of effort is spent on getting the true identification of the buyer and the seller of Bitcoins so as to make everything above board. From getting information of users through third party verification processes to having strict internal controls and monitoring procedures in place, Bitcoin exchanges are fully reliable and dependable.
Bitcoin currency is a crypto currency that makes transactions difficult to trace. It can be lethal in the wrong hands and susceptible to illegal money laundering activities or funding of terrorism. This is one of the reasons why reputed Bitcoin currency exchanges have stringent AML safeguards in place and outsource external audits to independently monitor the systems and check on other risk mitigation programs.
Why is trading in Bitcoins such a rage today? For one, all trades are fully SSL encryption for added security and there can be thousands of transactions per second. Every trade is protected by firewalls as an added measure. Most exchanges deal in multiple currencies though the payout is generally in USD and Euro. However, with the spread of Bitcoin trading to all corners of the globe, trading is accepted in any pair of currency to facilitate easy transactions wherever you might be in the world. Bitcoins is the currency of the modern world with trade in it growing exponentially. A Bitcoin currency exchange has to keep up with the constantly changing times, rates and procedures which most of them are able to do.