Bitcoin is a type of digital currency, created and held electronically. No one controls it.

Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems. It’s the first example of a growing category of money known as cryptocurrency.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.

As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.

Bitcoin is decentralized: No single institution controls the bitcoin network. It is also transparent: transactions are visible to anyone who has an internet connection.

Each transaction is stored publicly and permanently on the network, which means that anyone can see the balance and transactions of any bitcoin address. Bitcoin addresses aren’t linked to names, addresses, or other personally identifying information by default.

Transactions are public and can be seen by anyone on the blockchain, but Bitcoin addresses are pseudonymous—they’re not linked to real-world identities. That said, exchanges like Coinbase have implemented know-your-customer (KYC) measures to prevent identity theft on their platforms.

Despite its reputation for being untraceable, Bitcoin is not completely anonymous—transactions can be traced back to specific Bitcoin addresses via the blockchain explorer like Blockstream Green. If someone knows your address, they can see how much money you have at that address.

And if you use a service like Coinbase or Kraken to buy or sell Bitcoin, your personal information may be linked to your Bitcoin transactions as well.

While some people view Bitcoin as an investment, others view it as a digital currency or a new way to pay for goods and services—a sort of PayPal 2.0 for the internet age. So far, it has mostly been used as an investment vehicle or a way to store value—in other words, people have been buying Bitcoin in hopes that it will appreciate in value (like investing in a stock) or using it as a digital version of gold (a store of value).

Recently however, more and more people have been using Bitcoin to make purchases online—especially since major retailers like Overstock and Newegg started accepting it in 2014. And with Microsoft now allowing people to use Bitcoin to purchase content from its online store—and with other big names like Expedia following suit—it looks like Bitcoin is finally starting to gain traction as a mainstream payment method.

So what exactly is Bitcoin? Is it digital gold? An investment? A new way to pay for things? Or all of the above? Let’s take a closer look at each one of these:

Digital Gold: Like gold, bitcoins are scarce (there are only 21 million bitcoins in existence) and durable (they can be stored in a digital wallet). But unlike gold, bitcoins can easily be divided into smaller units (divisible up to eight decimal places), making them useful for everyday transactions.

And thanks to the decentralized nature of the Bitcoin network—anyone can process transactions using powerful computers called miners—there are no middlemen or banks necessary to make a transaction happen; all you need is an internet connection. This makes sending bitcoins fast, secure, and relatively cheap (no matter where in the world you are sending them).

Investment: Thanks to its scarcity and usefulness (more on this later), many people view bitcoin as an investment vehicle—a way to buy into the future success of the cryptocurrency while hedging against potential losses in other investments (like stocks or fiat currencies). While there are certainly risks associated with investing in bitcoin (just like there are with any other investment), there’s also tremendous potential UPSide; if cryptocurrency becomes widely adopted by businesses and consumers around the world, then the value of bitcoins could skyrocket over time. Of course, this is all speculation at this point; we don’t know for sure what will happen with cryptocurrency in the future.

But if you’re interested in investing in bitcoin now or simply want to hedge your bets against potential future losses in other investments, then buying some bitcoins could make sense for you. Just remember that investing in bitcoin is risky—just like any other investment—and you should only invest what you can afford to lose.”.

In conclusion, whether or not Bitcoin is considered virtual money depends on how it is being used. If it is being treated more like an investment vehicle or digital gold (a store of value), then it could be argued that it is not truly virtual money since there is a real asset behind it with actual value. However, if more businesses and consumers start using it as a regular payment method for goods and services online—like PayPal 2.