@
Forex Trading Seminar in Pretoria. Register Today!

Bitcoin is a global form of digital currency. Unlike traditional currencies, which were frequently backed by gold and silver, bitcoin is based on distributed computing. While traditional currencies are printed by central banks, bitcoins are created or "mined" by distributed computer networks.

Another way bitcoin differs from traditional currencies is that it is decentralised, meaning that it is not controlled by any single institution. As a result, miners around the world create new units of the currency and confirm its transactions.

Legal Concerns

While it holds many advantages over traditional currencies, bitcoin comes with risks of its own, and every prospective user should be aware of these risks and how to manage them. Just like the cash in your wallet, the safety of your bitcoins depends upon your own vigilance.

One of the benefits of virtual currencies like bitcoin is that every transaction and individual bitcoin is tagged and traceable. This means that your money simply cannot disappear without a trace.

However, transactions issued with bitcoin cannot be reversed; they can only be refunded by the recipient. Bitcoin is not anonymous. All bitcoin transactions are stored publicly and permanently on the block chain, which means that anyone can see the balance and transactions of any bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances.

Small market

For this reason, it's good practice to ensure that individual bitcoin addresses are only used once. Because bitcoin is still a relatively small market, the market price of bitcoins may go up or down in response to relatively insignificant changes in demand.

Highs and Lows

This means that bitcoin's price fluctuations can be quite volatile. Although it is becoming less experimental as usage grows, bitcoin is still a relatively new phenomenon that reaches into new territory. As such, its future cannot be predicted by anyone.

Finally, bitcoin users must pay close attention to the tax and revenue regulations provided for the digital currency by government agencies. Jurisdictions can potentially tax income, sales and capital gains, and this extends to bitcoins.

[mk_button dimension="two" size="medium" outline_skin="dark" outline_active_color="#fff" outline_hover_color="#088933" bg_color="#1053a3" text_color="light" target="_self" align="left" fullwidth="false" margin_top="0" margin_bottom="15" url="https://www.fxcm.com/uk/bitcoin/" align="center"]Find out more about Bitcoin >>[/mk_button]

The information provided herein is for educational purposes only. This is not a solicitation or an offer to buy/sell. Site users should conduct their own due diligence before deciding to make an investment.

Any opinions, news, research, analyses, prices, other information, or links to third-party sites are provided as general market commentary and do not constitute investment advice. FXCM will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.