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A virtual currency
Unlike traditional currencies such as the euro or US dollar, Bitcoin currency is not printed by governments, but created by computation on computer networks. This process is called “mining” and controls the amount of Bitcoins in circulation. Bitcoins change hands in so-called peer-to-peer networks. These are a bit like file-sharing systems such as those used to exchange films or music.

How can I use Bitcoin?

First you need to install free-of-charge software on your computer to create a “digital wallet” that works much like an online bank account. Bitcoin can be exchanged for official currencies on special exchanges. Using bitcoin is quick and anonymous; payments can be made worldwide without using banks. The transactions are performed directly between the two users involved. Banks – which usually charge fees for their services – are not needed as financial intermediaries. Bitcoin can now be used to buy a number of items, and some companies, such as electronics vendors and hotels, accept payments made in Bitcoin. Moreover, the cryptocurrency can be bought and sold at a later point to profit from rising bitcoin prices. As its popularity keeps growing, bitcoin is increasingly becoming an object of speculation.

How safe is Bitcoin?

Bitcoin may continue to grow in importance. However, there are some risks and dangers associated with it. The European Banking Authority warns that prices may be subject to massive ups and downs, and speculative investments may result in substantial losses. Because of the cryptocurrency’s high degree of anonymity, bitcoin is frequently used by criminals for money laundering. However, transactions can now be traced very easily.
What is Bitcoin?

What Dr. Dr. Money says

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