Bitcoin is being described as cyber money, virtual currency and cryptocurrency. It is a method of using technology to speed up financial transactions and reporting. Transactions are made with no middle men – meaning, no banks – and no transaction fees! The system works without a central repository, they are not tied to any country or subject to regulation, which has led the US government to categorize bitcoin as a decentralized virtual currency.
Bitcoins can be used to buy merchandise anonymously. Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs, assuring both privacy and the inability to trace a transaction. Unlike credit cards, any fees are paid by the purchaser, not the vendor. Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods, or save their money.