One of the things you see often in news stories related to computer viruses and ransom ware is that the creators of these viruses often want to be paid in bitcoin. And you may be vaguely aware of other news articles about this type of currency. However, many people have misconceptions about bitcoin, and understanding what it is might help you understand why it is preferred by unscrupulous individuals.

First, bitcoin is a type of currency. Similar to dollars, pesos, or euros, bitcoin is a way for people to have a placeholder for some value. As money, it can be traded for a specific value of other types of currency, depending on how the market is doing. Using any type of currency is putting faith in the fact that the currency will retain its value. Bitcoin, however, is what is known as cryptocurrency. All of the information about bitcoin (who owns how much, transactions, etc) is stored digitally. And every person with a bitcoin wallet (the way to “own” bitcoin) takes part in the encryptions and systems which ensure that every single bitcoin is tracked.

What gives bitcoin its appeal to criminals however, is the anonymity. When transactions are made in bitcoin, the wallet numbers between which the transactions are flowing are publicly visible. Anyone can view them. However, there is no way to figure out who owns which wallet (unless of course, its you). This means that you can transfer funds to another wallet, accessible to someone else, with absolutely no way to find out who its owner is. If you are buying drugs, or engaging in other illegal activities, this makes bitcoin perfect for your purposes.

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With that said, its also a misrepresentation to say that everyone who uses bitcoin is a criminal. Other people use it because they like the novelty, they believe that its value will rise, or they distrust governments. So don’t be worried if you find that someone you know is using the currency. Additionally, the use of bitcoin is legal nearly everywhere, with many countries even explicitly permitting its use. The largest problem with using bitcoin is the risk that at some point in the future, the currency will drop in value drastically. This happens with real world currencies all the time, and it is incredibly difficult to predict even for types of currency that have been around for ages. With it so difficult to predict values of traditional currency, there will always be even higher risk associated with the unknown.