Digital Currency And An Online Payment System Essay

Digital Currency And An Online Payment System Essay

Length: 1341 words (3.8 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Bit-coins are both a world wide decentralized virtual currency and an online payment system created by some anonymous person with the pseudonym: Satoshi Nakamoto. It was introduced on January 3, 2009 and it peer to peer; users can transact without a middle man. After Nakamoto left the project, he gave ownership to a group of people to spread responsibility and to prevent one person gaining control over the entire bit-coin project. Bit-coins are created by a process called mining. Mining is a procedure where a computer will process work by giving up some computing power in order to verify and record payments into the public ledger or the block-chain. The anonymous use of bit-coins allows criminals to transfer payments secretly across the internet. This attracted many financial regulators, law enforcement agencies and the media.
The prices of bit-coins are set on the open market. Each unit of bit-coin is just an entry on a digital ledger. There is no central authority in Bit-coin, therefore people have to keep track of the bit-coins themselves. Anyone can open a bit-coin account and trade and sell. The current value of a single bit-coin right now is about four hundred and thirty three U.S. dollars. By combining the power of multiple computers to partake in solving mathematical computations, people can receive small amounts of bit-coins until they receive a single bit-coin. There are special machinery that allows the user to effectively increase the amount of bit-coins they make in a given time. For example, a CoinTerra TerraMiner IV, which costs about six thousand dollars, has a five hundred GH/s hash rate, a transformation of a string of characters into a shorter fixed length value or key, creates approximately 1.1 bit-coins a day...

... middle of paper ...

..., Expedia, Cheapair, BTCTrip and Dell give full access to buy anything using bit-coins. There are many benefits for merchants to accept bit-coin as payment. There is a 1-3 percent savings over credit cards or on PayPal. There are no charge-backs, and an increased privacy for your customers. The payment processor can convert 100% of the sale to the currency of your choice so there is no need to hold bit-coins.
One bit-coins is quite a large amount of money, so people of use smaller units of bit-coins to transfer payment. One millibitcoin (mBTC) is 1000 per bit-coin, a microbitcoin or a bit (μBTC) is 1 million per coin, and a satoshi is a hundred million per bit-coin and the smallest unit in bit-coin. For example if the rate is five hundred dollars per bit-coin, then ten dollars would .02 BTC or 20 mBTC or 20 thousand bits. The current market cap is $10,467,596,650.78.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on Bitcoins: Revolution of Digital Currency

- The internet was a phenomenon that enthralled excitement in people during the 1990's when the internet became public and has since evolved to become a staple of our society. The evolution of the internet has been likened to that the commerce industry may be facing with the increasing popularity of Bitcoins and other forms of digital currencies entering the market (Tindell). Bitcoin is a digital currency that was created by a person obscured under the pseudonym, Satoshi Nakamoto (Maurer), on November 1, 2008....   [tags: Online Currency, Peer to Peer]

Better Essays
2242 words (6.4 pages)

Essay on Electronic Currency : A Form Of Digital Currency

- The first transaction using bitcoins, a form of digital currency, occurred in early 2009. It wasn’t until around the middle of 2013, that bitcoins transactions actually started to surge in the online market. The unregulated digital currency quickly got worldwide attention of regulatory agencies and banks due the anonymous nature of transactions. This decentralized form of currency raised many questions and concerns because of the pure nature of the virtual currency. The accounting profession had no central guidance on how to classify and treat this new form of digital currency....   [tags: Currency, Money, Exchange rate, IRS tax forms]

Better Essays
1772 words (5.1 pages)

The Crypto Currency: Bitcoin Essay

- The Crypto Currency: Bitcoin Prelude There are lots of ways to make money: You can earn it, find it, or counterfeit it. Or, if you are Satoshi Nakamoto, you can create it. In November 2008, a mysterious entity going with the persona "Satoshi Nakamoto" published a research paper outlining his design for a new digital currency that he called bitcoin. None of the veterans had heard of him, and what little information could be gleaned was murky and contradictory. On his online profile, he said he is from Japan....   [tags: Currency ]

Better Essays
1487 words (4.2 pages)

Bitcoin : The Future Of Currency Essay

- John Connell Bitcoin Is the Future of Currency The global currencies of today have evolved. Prior to 1971, the dollar was backed by a physical accommodation otherwise known as gold. In other words, you could theoretically take your dollars to the authority and implore for gold in exchange. President Nixon announced that the dollar would no longer be backed by riches, but rather by the full belief and trust of the federal government. In other words the dollar was backed only by a vow from the government....   [tags: Currency, Money, Fiat money, Dollar, Numismatics]

Better Essays
1882 words (5.4 pages)

Digital Currencies: Bitcoin Essay examples

- ... After the transaction goes through, it is added in the ledger (block) and attached to the public block chain (1) Even though Bitcoin is virtual based currency, just like M-Pesa and PayPal, it is vastly different. Yes transactions are done online, but that’s where it ends. E-money systems like PayPal are directly backed by a sole entity and a bank. The money being traded is real government money and is valued as such. On PayPal you pay in USD, Euros, etc. Your PayPal is directly linked to your bank account....   [tags: digital money, cryptocurrencies]

Better Essays
2291 words (6.5 pages)

The Definition, Uses and Applications of Bitcoin Essay

- 1. Introduction These days, many people have heard about a new name: the Bitcoin. What is the Bitcoin. By its inventor, Nakamoto’s definition, the Bitcoin is a peer-to-peer, decentralized, encrypted digital currency(Nakamoto). For a long time, the Bitcoin was a currency only recognized and used in the circle of geeks, but recent months, the Bitcoin successfully drew the public’s interest in its roller-coaster-like price. Simultaneously, more and more Bitcoin alternatives, for example, Namecoin, Litecoin, PPCoin, Betacoin, etc....   [tags: decentralized, encrypted digital currency]

Better Essays
1770 words (5.1 pages)

What is Bitcoin? Is it the Cash of the Future? Essay

- Bitcoin is a digital currency, similar to cash due to the fact it is instant, however, is not managed or controlled by a central government or organization. Instead, the network is run on thousands of independent user’s computers. None of these computers have more control over the network than any other computer. The network that Bitcoin was founded upon is based on 40 years of research in cryptography and over 20 years of research in cryptocurrencies; by thousands of researches around the world....   [tags: digital currency, bitcoin, money]

Better Essays
1402 words (4 pages)

Description and Analysis of Bitcoin Essay

- Bitcoin has become a hot, controversial topic, but what is it and how is it used. Bitcoin is one of several digital currencies, but, as of 2014, it is the most popular one. It is a form of money, but for online use only. Bitcoin is the system of how payments are made, while bitcoin refers to the unit of online currency. Unlike traditional currency, Bitcoin is not regulated by a central organization. Even though it's been around for more than five years, not too much is known about the origins of Bitcoin....   [tags: currency, bitcoin, online money]

Better Essays
648 words (1.9 pages)

Essay on The Underground Online Revolution: Online Black Markets and the Bitcoin

- Picture an innocent looking online marketplace, similar to those in which you shop for discounted books on Amazon or cheap surfboards on eBay, except you have the option to purchase marijuana, acid, fake passports and licenses, hacking services and potentially the ability to “order a hit” on someone, this my friends, is the Silk Road and it does have a captain. He goes by the alias of “Dread Pirate Roberts,” he’s pocketed $80 million in commissions, and he is the operator of one of the most notorious online black markets which accumulated $1.2 billion in total sales with its nearly one million customers....   [tags: Silk Road, website, trade, Dread Pirate Roberts]

Better Essays
1448 words (4.1 pages)

Essay on Government Monetary Authorities And Its Origins

- The public’s understanding of what money is and its origins has ‘developed to the point where the government monetary authorities can now inflate with impunity’ (Carl, 2009:7), currency can be any form if backed by trust and understanding of it being a commodity that can be used to buy and sell things. The exchange is decided by individuals as what is to be traded as money, whether it is currency or a cigarette- based currency system that is commonly used within prisons. Trust is the basis of a currency system where all participators agree on the amount and what a particular thing is worth; money is essentially needed for the exchange of goods and services....   [tags: Money, Electronic commerce, Currency]

Better Essays
1206 words (3.4 pages)