New forms of technologies are coming up in support of the advances in network computing and encryption and these technologies have impacted not only how we do things but the global economy as well with inclusion of the exchange of goods and services. A significant development in the field of technology has been evident in the emergence of a virtual currency. A virtual currency is a scheme owned by the private sector system in most cases and is designed to enable peer to peer exchange and bypassing traditional clearing houses (Ali, Barrdear, Clews and Southgate 2014a).

The technology used in virtual currencies is evolving rapidly and the future of their evolution is a landscape that could be difficult to tell. Virtual currencies provide us with numerous potential benefits which include increased efficiency and greater speed in making transfers and payment both locally and internationally and would ultimately bring the work to a promotion of financial inclusion in currency transfers. However, everything that has a benefit could possibly have a risk. The risk in using a virtual currency lies in the use of vehicles for money laundering, fraud, task evasion and terrorist financing (Moore and Christin 2013). While these risks seem less likely to occur, it is clear that the use of a Virtual currency has numerous potential benefits that outweigh its risks. This essay is set to provide a personal take on the relevance of virtual currencies maintaining the beneficial side of a Virtual currency with reference to the new Bitcoin currency.

Bitcoin Currency

Bitcoin is described as a cryptocurrency. In simple terms a cryptocurrency means an electronic system of payments. The Bitcoin system of payment was invested by a group of unidentified programmers using the name Satoshi Nakamoto. They introduced the Bitcoin currency in 2008 October as open source software. The Bitcoin system of payment was set as a peer to peer system that enables transfer of currency between users in a direct manner but without an intermediary. Unlike other forms of currencies, the Bitcoin system is under the control of no one but electronic functioning that makes it easy to send and receive payments directly. Bitcoins are not in a printed form unlike euros and dollars. This currency is developed by people and businessmen who operate computers and technology systems universally using software able to solve mathematical challenges.

What makes this currency different from the normal currencies?

Bitcoin is an interesting development and I think what makes it useful and interesting lies in its ability to make payments electronically. That is, using Bitcoin currency makes it easy to purchase goods and services electronically. In this sense, the Bitcoin currency is like a conventional euro or dollar which is traded using digital platforms. The most significant characteristic and the most outstanding factor that makes it different from normal currencies is the lack of decentralization. There is no institution that controls virtual currencies network. The lack of decentralization and the absence of a controlling institution put people at ease since there is no need to queue up in a bank to get money.

How is using the Bitcoin currency beneficial?

The Bitcoin currency is printed by no one. This means therefore that there is no physical printing for Bitcoin like it is done in central banks. The system of Bitcoin currency makes its own rules, prints unaccountable money to its population but unlike central banks the more Virtual currencies produced the less the national debt and devaluation of currency (Meiklejohn, Pomarole, Jordan, Levchenko, McCoy, Voelker, and Savage 2013). By a community of people, the Bitcoin currency is created in a way that everyone can be part of its mining and distribution network. This network is responsible for creating transaction processes and other modes of payment while using the currency.

With the lack of a decentralized system, lack of a control system and the lack of accountability within the system, what are the benefits of using a virtual currency/ Bitcoin currency?

1. Fast

When making payment using normal banking systems and using a paycheck, it is common to fin the bank holding on to that money for days because of the lack of trust that the funds are really available. This is similar to other international wire transfers that take relatively longer time before maturing. Who would not prefer a system that is faster than usual banking systems? I think a majority of the public would opt for a virtual system because it is faster than usual. Transactions in a virtual system are instant and do not need confirmation details to have your money (Ali, Barrdear, Clews and Southgate 2014b). In the Bitcoin system, confirmation and the whole process of transfer would take about 10 minutes which is super-fast that any faster banking transaction.

2. It is cheap

When dealing directly from a community, your transactions would be cheap apart from being instant. However, I just like any other conventional systems that are characterized by middle men take longer time, I think a middle man would take longer to make your transaction a success and in the event there is an added amount for transaction, the middle man will take care of it making the fee minimal every time. For this reason I believe the virtual network system is relevant because of the need to save on extra costs used in depositing and withdrawing finances.

3. The system makes your financial information private as you want it

Very many times, I have found myself not wanting people to know what I have purchased and I believe there are so many people like me outside there. Bitcoin gives the relevance of privacy as it keeps every of your transaction private. On one side of the transaction, Bitcoin is transparent but this is one sided because third parties know where the money comes from and not where it is sent. On the other side, unlike it is done in conventional banks, the Bitcoin system makes everything within your account private.

Compared to traditional banking systems, the virtual currency systems are of much relevance because you own it. Taking for instance Paypal, if the management of the company views that your account is being misused, they have all the power to freeze your account and all your assets without any consultation. As an individual you are left with the decision to find whatever means you can to have the case cleared and get your funds back. However, with Bitcoin and any other virtual currency, you have every private and public detail on your Bitcoin address and not institution can take that away unless you personally lose it.