Bitcoin: digital retail buying
The outlook of virtual currencies
What is Bitcoin, how is it being used in retail, and how can we expect it to be used in the future?
The virtual currency “Bitcoin” (BTC) has made serious headway in the world of retail recently. Already in 2014, Scan Computers has become the first U.K. PC retailer to accept Bitcoin in an attempt to exhibit their market dominance, and show the world their approach as pioneers of innovation. Meanwhile, in the U.S., online retailer Overstock has started accepting Bitcoins at their site.
These recent steps into retail are beginning to hint at possibilities of Bitcoin, and potentially other cryptocurrencies, gaining mainstream success across retail. But what exactly is Bitcoin? How can we expect it to affect us, and what are the benefits and risks of the evolving digital currency?
What is Bitcoin?
Bitcoin is the world’s first decentralized currency. It’s designed for digital transactions, where funds are transferred directly from the buyer to the seller with bank clearing eradicating any bank transaction costs. Bitcoins are stored in a “digital wallet”, which is effectively a bank account that is not tied to any financial institution. There is a finite supply, as only 21 million BTC will ever be created. This, therefore, draws comparisons to valuable natural resources such as gold and silver. As a result, the BTC generation has been termed “mining”.
Money supply increases by a system-generated algorithm allowing the mining of 25 BTC every ten minutes. The amount of BTC generated is directly linked to the number of miners, therefore controlling the growth in money supply. Miners are individuals who have access to open source BTC mining software.
As of February 2014, there are approximately two million BTC miners in the world and one BTC = $945 USD on the linked currency exchange.