Bitcoin is a digital currency used by terrorists and drug dealers, as well as major companies like Microsoft and Overstock.com.
In other words, everyone from private individuals who order pizza to terrorists who order weapons.
With bitcoins, you can buy webcasting services, pizza or even manicures, reports Money.com.
Bitcoin was a currency created in 2009 by a mysterious software developer. He calls himself Satoshi Nakamoto. No one has ever met him, and it is not clear if he is one person or several people.
Bitcoin does not use printed money. It is digital only. The currency is created on computers by a community of people across the globe. Anyone can join that network, or group, according to Coindesk.com.
This network processes transactions made with the digital currency. Bitcoins are stored in a “digital wallet” over the Internet or on the user’s computer.
There is not an unlimited amount of bitcoins. Nakamoto set up rules to limit the currency to 21 million bitcoins, reports Coindesk.
With bitcoins, there are no banks or fees. Users do not register with their real names. Merchandise can be bought without the user showing her or his identity. Bitcoins are not taxed or regulated anywhere in the world.
Bitcoins are a favorite of criminals
Bitcoins have become “the currency of choice for people online buying drugs or other illicit activities,” reports Money.com.
For example, Silk Road was a major online market that used bitcoins to sell illegal drugs. It was shut down in 2014 by U.S. regulators.
Bitcoins are also being used by ISIS terrorists to fund operations, according to Ghost Security Group. It is a counter-terrorism network that focuses on the Internet and social media.
Morgan Wright is a cybersecurity expert and senior fellow at the Center for Digital Government, a national research and advisory institute on information technology policies.
He told Fox News that terrorists are increasingly using 21st century technology to transfer assets and finance their operations.
“Terrorists need anonymity,” Wright told Fox News. “Countries have gotten very good at tracking terror financing in the years since 9/11. Networks have looked for new ways to do it, and it appears they’ve found it in bitcoin.”
Bitcoins growing among businesses
Despite this dark side of the new currency, bitcoins have their supporters. More and more merchants are beginning to accept bitcoins.
Some people buy bitcoins as an investment, hoping they’ll increase in value. There are many online marketplaces that allow people to buy and sell bitcoins using different currencies. Coinbase, in San Francisco, runs the world’s largest bitcoin exchange, and operates 2.8 million bitcoin wallets globally, according to Wired. You can also buy and sell bitcoins on Bitquick, Xapo, and CoinCorner, among other exchanges.
It is possible to do complex financial trades with bitcoins, such as futures, options and swaps. The price of bitcoins on online exchanges has fluctuated widely, which has led to speculation in the digital currency.
In 2009 and early 2010, bitcoins had “no value at all,” said Wired. Then in late 2013, it reached a high of $1,216. As of January 6, 2016, the price of one bitcoin was about $434.
Wired wrote that bitcoin usage “has hit a record high.”
You can also send bitcoins using mobile apps. This is similar to sending cash online. It is fast and convenient. And you can set up a bitcoin address in seconds, with no fees and no questions asked.
Some people like bitcoins because they are not controlled by one central authority. Traditional currencies, such as the U.S. dollar, are controlled by the government’s central bank. The bank can print more money as part of government policy.
Bitcoins, in contrast, are controlled by the people who use them and are viewed as more democratic by their supporters.
The Washington Post said bitcoins were one of the six technologies in 2015 that would change the world. The newspaper wrote that the technology behind Bitcoins, called blockchain, is “an almost incorruptible digital ledger that can be used to record practically anything that can be digitized …”
“It has the potential to transform the lives of billions of people who lack bank accounts and access to the legal and administrative infrastructure that we take for granted,” wrote the Post.
Regulators step in
There is a move to regulate bitcoins. In 2014, the U.S. Internal Revenue Service said bitcoins could be taxed. In addition, the U.S. Securities and Exchange Commission, which regulates the sale of stocks and bonds, warned investors that bitcoin users may be targeted for fraud in risky investment schemes.
There are also efforts to regulate bitcoins globally. The European Commission is expected to release regulations by 2017 that would affect European Union nations. “Governments are concerned about taxation and their lack of control over the currency,” writes Money.com.
Despite the critics, bitcoins continue to grow in popularity worldwide. Juniper Research said there were 1.3 million bitcoin users last year, and it estimates there will be 4.7 million users by the end of 2017.
Wired said bitcoins are “thriving like never before. And some say this is the year it finally reaches the mainstream.”
I’m Mary Gotschall.
Mary Gotschall wrote this story for Learning English. Kathleen Struck was the editor.
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Words in This Story
digital – n. using or characterized by computer technology
currency – n. something that is used as money
software – n. the programs that run on a computer and perform certain functions
transaction – n. a business deal; an occurrence in which goods, services or money are passed from one person, account, etc., to another
merchandise – n. goods that are bought and sold
illicit – adj. not allowed by law; unlawful or illegal
asset – n. something that is owned by a person, company, etc.
anonymity – n. the quality or state of being unknown to most people
fluctuate – v. to change level, strength or value frequently
speculation – n. activity in which someone buys and sells things (such as stocks or pieces of property) in the hope of making a large profit but with the risk of a large loss
incorruptible – adj. very honest; incapable of being corrupted
ledger – n. a book that a company uses to record information about the money it has paid and received
infrastructure – n. the basic equipment and structures (such as roads and bridges) that are needed for a country, region or organization to function properly