- What is Bitcoin and how does it work?: Bitcoin is a digital or virtual currency. It uses peer to peer technology that enables pay to anyone anywhere and with no official authority of control. Bitcoins are sent from one user to another after each use and each payment transaction is broadcasted to the network and included in the blockchain so that it cannot be spent twice.
- What type of person would the use of Bitcoin appeal to and why?: Bitcoin would be ideal to those who want something easy, fast, and hassle free. Bitcoin is sent easily over the internet without having to deal with any other third party, meaning no bank fees and it’s fast. When funds are received, it’s usually available to spend within minutes. It is supplied by software and agreement to use it can’t be regulated by anyone else.
- Is it possible that the government’s reaction to the use of Bitcoin could affect the value of Bitcoin currency? Explain why or why not: The value of bitcoin would not be affected as the user owns it. It is a decentralized currency with no central authority so no one can take it away from you.
- Many who have invested in Bitcoin have profited substantially. Having said this, Bitcoin is still relatively new. Explain why it might be smart, or not so smart, to invest in Bitcoin: Bitcoin is very similar to stocks. You invest at your own risk and the value is always changing; there isn’t a guarantee for gain. For that reason, it isn’t the best idea to invest in Bitcoin. Though it’s easier to use and inexpensive to manage, there isn’t a safety net like what you would have with banks. If someone somehow takes your money, then that’s it. You don’t have the luxury of reporting to authority because the agreement of using bitcoin comes with that risk.