Bitcoin exchange

Through various exchanges, bitcoins are bought and sold at a variable price against the value of other currency. Bitcoin has appreciated rapidly in relation to existing fiat currencies including the US dollar, euro and British pound. In May 2013, one bitcoin traded at around $125.

Taking into account the total number of bitcoins mined, the value of the money supply of the bitcoin network stands at over $1.4 billion USD. According to Reuters, undisclosed documents indicate that banks such as Morgan Stanley and Goldman Sachs have visited Bitcoin exchanges as often as 30 times a day.

Employees of international banks and major financial organizations have shown interest in the Bitcoin markets as well.

One of the most famous exchange sites are: mtgox.com btc-e.com At these websites you can buy bitcoins, trade bitcoins for other coins or sell them and turn your bitcoins into real money.

Bitcoin Strengths

Anonymity and privacy

Perhaps the biggest strength of bitcoin is that it is virtually anonymous. Because bitcoin transactions are sent from hash address to hash address (which, recall, can be changed from transaction to transaction), it is possible for the two parties involved to be completely unknown to each other. For a somewhat comparable analogy, think of it as sending cash in the mail to a PO box where the return address is another PO box. Due to this aspect of bitcoins, it is very very difficult to build a profile of any single user. In many ways, with regards to privacy, it is better than cash.

Additionally, because there is no central processing authority (as the peer-to-peer network handles this), it is impossible to lock anyone out of the system.

No required transaction fees (for most transactions)

Unlike when you use a credit card where the processor (e.g. Visa, Mastercard, etc.) charges a transaction fee which the merchant has to pay, bitcoin currently has no such required fees onmost transactions.  Because transactions are processed by the peer-to-peer network, which is rewarded by the system with the creation of new bitcoins, a reward for the processors (miners) is built-in.

So why would you choose to pay a transaction fee? Currently, the only practical reason would be to prioritize the block the transaction is included in. As stated above, a transaction is not considered “official” until it is 6 blocks deep, and when a transaction is being considered for inclusion in a block, a heavily considered factor is the transaction fee associated with it. Because mining (processing) is motivated by earning bitcoins, including a transaction fee is a sure way to bump up the priority of a particular transaction.