Bitcoin is a type of digital currency. This means it is made and used electronically. The currency is not under the control of anyone. It is not printed as it is the case with the other conventional currencies such as the Pound or Dollar, but are created by individuals, and more by businesses that operate computers across the world by the use of software, which deals with mathematical problems (Jaffe, & Jessica 12). The currency has increasingly received criticism because it has been a favourite for criminals to use in their illegal activities, and this has captured the attention of the media, governments and financial regulators. As a result, many countries have not embraced the use of bitcoins due to the controversies that surround its use (Vigna, & Casey 54). The currency has a decentralized nature, hence, its control is nearly difficult to enforce. Its legal status considerably varies from one nation to another, while in others, it has not been completely defined.
Nevertheless, the currency is a good thing for the banking industry and businesses as it does not involve a lot of bureaucracies, and has some advantages, even though some countries do not consider it as real currency. Setting up an account with the conventional banks is a very long process with fees charged to open some accounts such as merchant accounts. On the other hand, setting up a bitcoin address takes seconds with no questions asked. It also makes transactions faster since money can arrive within minutes of sending as long as the payment has been processed by the bitcoin network (Alabi 24). In addition, it is cheap to use as it does not charge transaction fees like the traditional banks that may charge up to $20. The only major disadvantage that it has is the fact that it cannot be controlled. However, various stakeholders such as financial regulators and banks should try and device ways that can be used to control it so that it can be universally accepted.
- Alabi, Ken. “Digital blockchain networks appear to be following Metcalfe’s Law”. Electronic Commerce Research and Applications, 2017. p.24.
- Jaffe, Steven H., and Jessica Lautin. Capital of Capital: Money, Banking, and Power in New York City. Columbia University Press, 2014. p.12.
- Vigna, Paul and Casey, Michael. The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order (1 ed.). New York: St. Martin’s Press, 2015. p.54.