Is Bitcoin real money?
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 21 Mar 2021
Bitcoin is a digital currency that was launched by a secretive entrepreneur in October 2008, with the aim of being “a new electronic cash system that is fully peer-to-peer with no trusted third party”.
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Bitcoins are created by users (a.k.a. “miners”) who allow the Bitcoin system to use their computing power to process Bitcoin transactions
These miners are also rewarded with the some of the transaction fees paid by those who use Bitcoin.
A few retailers, especially online, accept Bitcoin, partly because the transaction fees are lower than those of credit cards.
However, Bitcoin’s value has been volatile
Fewer retailers than expected have signed up to accept Bitcoin because any transactions made in Bitcoin are not protected by financial regulation.
Bitcoin is special it is made possible by special cryptographic techniques so that it can not be faked
Each Bitcoin can only be spent by the same person just once.
The peer-to-peer nature of Bitcoin bypasses the need for banks, allowing people to lend to or borrow directly from others.