Bitcoins are part of the first generation of crypto-currencies, which are currencies based on cryptography instead of on a central authority. The cryptography behind a Bitcoin automatically controls its creation and all its transactions.
Pros of Bitcoin
All transactions which involve Bitcoins are carried out directly by the network protocol. No central authority is involved. While this may be either a pro or a con, Bitcoin's developers specifically developed Bitcoin with this in mind. Most Bitcoin supporters identify the lack of a central regulating authority as Bitcoin's best quality.
The encryption which makes up each Bitcoin makes it the most secure of all current currencies. It is next to impossible to counterfeit a Bitcoin's data trail. This means that it is cost-prohibitive to attempt to counterfeit Bitcoins, even if Bitcoins were worth 100 times their current exchange value. However, Bitcoin transactions and balances are still vulnerable to theft, because the pseudonym used to process a Bitcoin transaction does not have the same security as the Bitcoin itself.
Bitcoin transactions can be conducted anywhere in the world which has access to the Internet. This gives them a near-instantaneous global reach which leaves wire transfers and even Paypal in the dust. However, the same global reach also makes Bitcoins a useful tool for money laundering.
Governments are not currently equipped to monitor Bitcoin wealth or currency flow on any large scale, which places Bitcoin transactions outside sovereign control and possibly even taxation for the time being. Yet this also places Bitcoins beyond the reach of economic sanctions, which could potentially undermine the effectiveness of economic sanctions completely.
Cons of Bitcoin
The Bitcoin concept is revolutionary. If it or any of its competitors becomes established as a working currency, it will change the way everything that has been taken for granted about money. The effects of these changes on financial markets cannot be predicted. It is possible that they could be severe far beyond the level of the 2007 credit crunch.
Bitcoin is the first major venture of its type, but it is not the only currency of its type. Litecoin is already posing a serious challenge. Other competitors will certainly follow. Even if Bitcoin's technology were superior, which is not a certainty, there are no guarantees that Bitcoin will not become the Betamax of its generation.
In fact, there are no guarantees of any kind with Bitcoins. You cannot expect their value to remain constant, at least for the short-term future. If your hard drive is corrupted, you cannot exchange the remaining pieces of Bitcoin for the closest equivalent of recoverable data. If someone does develop an easy way to counterfeit them, you have no recourse.
The legality of Bitcoin is not certain. To keep the rate of currency production from escalating into inflation and hyperinflation, most countries restrict the right to create money to the government or to a government-recognized private body. The potential for truly anonymous transactions may also affect Bitcoin's legality, especially because they are already heavily used by the black market.
'Bitcoin' virtual currency pros and cons P2P money source bit coin investment trading stock ,more information about the virtual currency BitCoin ,browse videos from channal http://youtube.com/user/cosmeticmachines