Why digital currency Bitcoin won't replace your credit card in 2014

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Sir Bob Geldof and Russell Brand have slammed digital currency Bitcoin, but what's it all about? We investigate the internet money revolution.

Bitcoin currency - 5 Bitcoin flaws that prove you're not missing out - gadget feature - handbag.com

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Some famous faces have spoken out against digital currency Bitcoin beating the bank and making it big.

Sir Bob Geldof claims Bitcoin "simply won't work" because it's a "free for all" system that won't protect the value of our cash.

Understanding Bitcoin is a bit complicated


There are only 21 million bitcoins in existence (and currently around 12 million in circulation). You either have to trade for them, buy them or 'mine' them from the internet using math-puzzle-solving hardware. Then you'll need to download a Bitcoin wallet, create a Bitcoin address and send payments through the 'Block Chain'.

Bitcoin doesn't have a set financial value to keep it grounded


When a bitcoin changes ownership from seller to buyer the two parties have to set the price. There's no centralised bank of Bitcoin so the price is set by supply and demand. One day you could be rich and the next day you're super poor. If you want to buy one bitcoin, the current going rate is over £540.

Bitcoin is regularly used to fund anonymous illegal activity


Transactions are private and hard to trace, which means lots of buying and selling using bitcoin happens in the arse-end of the internet where dodgy dealings are rife.

Not many places will accept your bitcoins


It's not like you can just rock up to Tesco and offer up your bitcoins for some loo rolls. Very few places are open to digital currency, so you'll still need pounds and pennies.

The future of Bitcoin is a murky grey area


Bitcoin is particularly vulnerable to theft, so experts are working on making it safer with special anti-virus and encryption technology. Plus, Bitcoin is tax-free because it's not a recognised currency, as soon as it becomes official it will defo be taxed, making it a far less exciting prospect.

Are you going to trade in your trade in your life savings? Tweet us your Bitcoin questions @handbagcom.

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