BITCOIN - BENEFITS AND RISKS

Abstract

Bitcoin, new digital money, recently got into focus. It uses P2P interaction where each owner transfers the electronic coin to the next owner signing and adding to the end of the coin a hash of the previous transaction and the public key of the next owner. Payment verification is accomplished by notifying the entire network about the transaction. This prevents double-spending and avoids the generation of non-existent money. Personal information between parties in the transaction are not transferred. Unlike completely anonymous transaction, the Bitcoin transactions remain recorded and available to the public. However, participants in the transaction do not have to operate under their own names, and can log in through their aliases. Bitcoin offers lower transaction costs, increased privacy and for more time protection of the purchasing power from inflation, but still have no enough participants and financial base to ensure stability. So its price significantly oscillates. Still, among the users, there is uncertainty about the safety on the theft and fraud. Also, among the relevant state authorities, there are numerous dilemmas and analyses of present and future risks related to the implementation of Bitcoin. Although the number of users of the Bitcoin system grows, it is still small compared with the number of credit cards users, or use of the USD, EUR and other money. However, the Bitcoin system is high conceptual and technical achievement. It can be used by existing financial institutions (which also may emit their own bitcoins). There is no obstacle that even the governments themselves use this technology. In this paper, here will be presented Bitcoin technology, the advantages of this system and some of the risks to whom users are exposed.