What is Bitcoin?

Bit coin is a new type of currency that is digitally created and stored, globally available and decentralized without the need for a trusted party like a bank or government. No single person, company or government controls it.

Bit coin is stored in a Bit coin wallet and can be sent between different wallets, anywhere in the world, in a matter of seconds (not days) and for a few cents (not hundreds of rand).

Bit coin is the greatest financial innovation of our era and it will change your life, if it hasn’t already done so. Don’t take my word for it. Here are some thoughts by great minds on Bit coin:

Bit coin features

In some ways, Bit coin is just another currency: it has an exchange rate against the South African rand (and US dollar or other international currencies), it can be bought, sold and traded and it can be used to pay for things.

There are however unique characteristics to Bit coin that you should know:

Bit coin is Global

Bit coin can easily be sent to a wallet across the room or across the world. Since it is sent peer-to-peer, there are no third parties or borders to restrict the transaction. Bit coin can be bought and sold for local currencies (also known as fiat currency) in almost every country in the world.

Bit coin is Cheap

The transaction fees levied by card processors for transactions and the settlement fees charged by banks for international transfers are significantly higher than fees for sending bit coin. Merchants in South Africa pay between 3-6% for online credit card transactions (with high rates of credit card fraud). These costs are passed down to the consumer.

It costs a fraction of that to pay with Bit coin (between 0-1%, depending if the merchant keeps their money in Bit coin or converts it back to South African rand) and the fraud risk is 0.

Bit coin is fast

It takes one to two days to receive a bank payment from a different bank, two to five days for a merchant to receive funds from a credit card transaction and up to a week or more for international bank transfers.

Bit coin transactions are instantly sent and usually confirmed in under 30 minutes, from and to anywhere in the world.

Bit coin is Secure

Unlike most other payments, to complete a Bit coin transaction you don’t need to provide any sensitive information (which can be stolen or abused).

When you want to receive a payment, you simply provide the sender with your Bit coin wallet address. This address is a receive-only address: you’re free to distribute it (people can only send money to it –pay you– not withdraw from it).

You don’t need to send any confidential information like your full name, physical address or credit card number when making Bit coin payments.

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