What is Bitcoin?
What is virtual currency?
First and foremost, virtual currency is money! Bitcoin is a type of virtual currency with meaningful value in the real world, and as such, it can be traded for dollars, yen, or any other global currencies. Bitcoin is typically denoted on currency exchanges as "BTC".
One of the differences between a virtual currency, such as Bitcoin, and a physical currency, such as yen or dollars, is that there is no physical manifestation of Bitcoin.
Virtual Currencies in the Real World
Online games is one area in which virtual currencies are already widely used. Using physical currency, you can purchase virtual currency in the game's world. You can then buy items in the game using this unique currency. This type of virtual currency is valuable in the realm of that online game.
Certain online websites also offer a similar type of virtual currency, allowing you, for example, to purchase 1,000 "points" in exchange for 1,000 JPY. Your points can then be exchanged for different products and services on that website. That virtual currency has value within the confines of that website.
In this sense, Bitcoin is similar. You can purchase products or services at any shop or website that accepts Bitcoin.
What sets Bitcoin apart?
If so many virtual currencies already exist, what makes Bitcoin special? The truth is, Bitcoin is fundamentally different from these types of virtual currencies in many ways.
Virtual currencies which are created by companies as part of their gaming or e-commerce sites are targeted at improving customer retention, and increasing profits.
Bitcoin, on the other hand, was created as a virtual currency to facilitate payments anywhere, just like dollars or yen.
Bitcoin aims to be a daily use currency that can be used all over the world. Rather than using physical bills or coins, Bitcoins are stored in virtual wallets on your PC or smartphone, and can be used to buy products and services globally.
While we are still in the early stages, given Bitcoin's inherent convenience, safety, and global nature when compared to government currencies such as dollars or yen, Bitcoin is poised to become the virtual currency of the next generation!