Bitcoin is the breakthrough in technology expected to transform centralized money system to decentralized one. A financial system, which is decentralized, is cheaper, faster and better. These attributes will form the basis for a historic change in the money history. Bitcoin is a virtual currency whose ill repute and popularity continues to increase. Many companies, including Dell, have started accepting Bitcoin payment.
The list of services and good, which have bought using Bitcoin encompass airline tickets, pizza delivery and university tuition. A number of firms have begun to pay personnel in Bitcoins. In particular, Canada is a pioneer in Bitcoin ATM’S. Vancouver is the first city to have a Bitcoin ATM installed, as well as a number of cities in Canada now have Bitcoin ATMs too. In worldwide rankings, according to a Montreal Economic Institute study, Canada is second after United States in capital investments in Bitcoin firms.
The Bank of Canada has been warning the public over the risks associated with electronic money. Bitcoins can be are a desirable payment mode since they can lead into fewer fees, as well as a quicker payment method than traditional wire transfers. Nevertheless, there are some risks that are associated with Bitcoin usage as a payment method. Bitcoins’ value is not fixed, which means it can fluctuate considerably, which makes it more similar to stock consideration instead of cash. Bitcoins’ value, for example, dropped over 50 percent from December 2013-April 2014. Hence, such timing issues closing delays may substantially affect Bitcoin value consideration.
Bitcoins are largely unregulated, as well as subject to a tentative legal landscape. Bitcoin transactions, unlike traditional transactions that are currency-based involving personal bank accounts, can be done in a way, which does not identify the person doing the transaction. Therefore, Bitcoins have been utilized to buy illegal goods. The FBI, for example, shut down an online drug marketplace (Silk Road) and in the process they impounded 28.5 million dollars’ worth of Bitcoins.
The regulation level affecting Bitcoin varies extensively between nations, as well as is shifting rapidly. This requires those using Bitcoins to finance a transaction to stay updated of the changing legal landscape. For example, in Canada, Bill C-31 received royal sanction on 19th June 2014 and the scope of its anti-money laundering stretches out to individuals trading in such virtual currencies as Bitcoin. Therefore, this subjects Bitcoin transactions to governmental anti-money laundering requirements of reporting.
Other prospective risks exist. For example, Bitcoins might be hard to convert into cash in case the value drops sharply in future or their difficulty in traditional financial systems’ accessibility. Virtual currencies are prone to hackers and technological obsolescence, which makes Bitcoins unreliable. For example, Mt. Gox, globe’s largest Bitcoin exchange, lost millions to hackers.
In Canada, wherein tech-savvy dwellers are displaying sturdy interests in the Bitcoin trend, the general currency adoption remains low. Bitcoins have not yet offered real benefit to average shoppers to spend them.
Credit cards, along with other mobile payments forms are more attractive to persons looking to be safeguarded from cyber theft. Moreover, most credit cards offer attractive cash-back options, rebates, as well as air miles. The best adopters of Bitcoins are high-risk investors buying and holding upon the conviction their value will rise. Canadians require more information about what Bitcoins actually are, as well as how the system operates.
Conclusively, this blog on Bitcoin is crucial particularly to a course on money and banking because it highlights an imperative issue that affects banking. The Bitcoin technology removes the middleman (banks) meaning that in future banks might become obsolete. Hence, money and banking courses need to come up with ways of ensuring they remain relevant in the industry.