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Bitcoin is a type of digital currency in which encryption techniques are utilized to regulate the generation of unites of currency and verify the transfer of funds, without any bank, financial institution or government involvement.
It was created in 2009 by a person using the alias Satoshi Nakamoto. Banks are not necessary when using bitcoin, nor are real names, so purchases can be made anonymously.
There are several ways to purchase bitcoins. First, however, you need a safe place to store your bitcoins—this is called a bitcoin wallet. The technology behind bitcoin is called blockchain; blockchain is a de-centralized authority capable of making and verifying transactions much more quickly than traditional networks, i.e. banks.
A bitcoin wallet is essentially a bank account for bitcoins; you receive bitcoins in your wallet; you store bitcoins in your wallet; and you can send bitcoins to other people from your wallet. You can also buy items with bitcoins in your wallet.
Your bitcoin wallet can live on either your computer, your cell phone, the web, an external piece of hardware or an actual bank. People and businesses can choose a bitcoin wallet that is best suited for them.
Using bitcoin is a faster, safer and more efficient way to transfer money or exchange money for goods. Some companies are now using bitcoin payroll services, while other companies, such as Amazon, Starbucks, Microsoft, Dell and Overstock.com accept bitcoin as payment.
To save money:
Bitcoin transaction fees are either cheap or non-existent; bitcoin users are usually charged between 1 percent and zero per transaction. You read that correctly—you can send or accept bitcoin payments without any fees attached.
To save time:
When doing business, companies typically have to wait for payments to be transferred into their bank accounts. However, since the blockchain technology takes care of all the transactions and there’s no middle man, so to speak, involved, bitcoin payments are speedier than credit card payments. Much speedier, as in same-day payments and sometimes even same-hour payments.
To avoid payment disputes:
There are no clashes over bitcoin payments since bitcoin payments are final and cannot be contested.
To avoid international business hassles:
Bitcoin is not associated with any one company, country or government. Bitcoin doesn’t care about borders; all it cares about is that a customer, supplier, vendor or company accepts bitcoin, and there are many that do. There is an even a website that can search your local neighborhood for places that accept bitcoin.
Bitcoin can make e-commerce and everyday business easier for entrepreneurs and customers alike, as the people on the cutting-edge of commerce have already discovered.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
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