Created in 2009 by Satoshi Nakamoto, Bitcoin is a crypto or digital currency that offers an assurance of low transactional fees as compared to the traditional methods of online payments. There are no physical notes or coins, rather balances are stored in public ledger, also referred to as the block chain, which is accessible to everyone. In simpler words, Bitcoin is the money that is completely virtual. The chronological order of the blockchain is governed by cryptography.

How Does Bitcoin Function?

As complex as it might sound to a new user, Bitcoin is actually simpler without requiring you to understand any technical details. The following representation shows the entire transactional process of Bitcoin:

Getting Acquainted with Terminologies and functions-

• Bitcoin Mining- A process by which the bitcoins are released in circulation is called Bitcoin Mining. The process begins with adding the bitcoins and is followed by transaction verification across the network. This process takes about 10-20 minutes.
• Bitcoin Wallet- Once the Bitcoin wallet has been installed on your phone or in computer, first bitcoin address will be generated. This address can be disclosed to your peers for future transactions. Bitcoin addresses should be used only once.
• Private Key- The transfer of values between two different bitcoin wallets is called as transaction and uses the user’s private key for sign-in, which algorithmically proves that the transaction has come from the owner’s wallet.
• Processing – Also called as mining, the pending transactions are confirmed in this step by inclusion in the block chain. The transactions ought to follow the cryptographic rules so as to be verified by the computer.

How Does a User Get Bitcoins?

The three ways by which a user can get Bitcoins are:

• By purchasing bitcoins with actual money.
• By selling goods to buy bitcoins.
• By creating them on the computer.

Bitcoin for Business:

Considered as a secure and economical way of transactions, Bitcoins hold the following benefits for your business:

• Since there is no transactional fee associated with receiving bitcoin, a user can control the amount of spending fee.
• Bitcoin payments are irreversible, unlike the other contemporary payment gateways, which serves to protect the merchants from possible frauds.
• Since the banks have zero role to play in the transactions of bitcoins, it is faster and hassle-free to carry out international transactions.
• If a subset or a group of people of an organization are authorized to access a transaction, it allows a multiple signature feature as well.
• Unlike the sensitive information that you share using credit/debit cards during online transactions, bitcoin is easily accessible with single private key.
• The complexity of the traditional transactional methods and processes is avoided with easy global cash exchanges, making the business dealings simpler than before.
• The storage of funds collected has become easy and safer.
• The Bitcoin App allows the back-up facility without the risk of losing the funds.

Risks Associated with Bitcoin

It would be naïve to ignore the risk factors or the disadvantages associated with the bitcoin. Some monetary authorities and the central banks have recently issued certain warnings to the consumers of Bitcoin around the world:

Should Your Business Join Bitcoin Platform?

As a business owner the Bitcoin and its positive aspects might sound attractive to your competitive spirit. Consider the following factors while taking first step towards Bitcoin Wallet for your business enhancement:

• The wildly fluctuating value of a single bitcoin, its effect upon your business should be kept in mind. The fluctuations have, however, so far been upwards.
• Since the rules of cryptocurrency has not been laid down by the IRS, bitcoin as payments could raise taxation concerns as well as pose as a reason for future audits.
• The businesses have seen a significant increase in their market shares since hopping on the Bitcoin bandwagon. It can thus be strategically a positive move.
• Even though many countries do not recognize Bitcoin as yet and some have even banned it, yet, countries like US, Morocco, Nigeria, South Africa, Zimbabwe have made the bitcoin transactions legal.

Many countries are either considering or are already regulating the rules for using Bitcoin with regards to the taxation. In businesses it is gaining popularity because of its low transactional fees which helps the business owners to make more profit than they can in the traditional monetary transactions, where a huge amount gets deducted in the name of taxes. Also, for the small businesses, the cash management has become simpler with this digital currency wallet. For the new businesses which might be concerned by the storage risks of this wallet, an insurance covered Bitcoin service is now available through Elliptic Vault, which ensures more safety and assurance to the prospective users.