Bitcoin has been in the spotlight for the past couple of years and has prompted many people to invest in it. At the moment it´s latest news due to the current value loss. If you are one of those people who still don´t really understand what the buzz is about, read this blog post and get your basic knowledge.
Summary: 5 Minutes read, Level: Beginner
Bitcoin by definition is a virtual currency that is the equivalent of 6,470 US Dollars. You may think that this is a mind-blowing number, yet somehow this is nothing compared to what it was worth a while back. It´s value has previously skyrocketed to more than 19,000 US Dollars, and this was in December 2017.
The exact start date of Bitcoin is unknown.
Bitcoin was the brainchild of Satoshi Nakatomo (the mysterious person/group of people), who in 2008 wrote a paper called Bitcoin: A Peer-to-Peer Electronic Cash System and the software was released in January 2009. History was made on January 12th when the first transaction was completed.
The first commercial transaction occurred a year later when Laszlo Hanyecz bought two pizzas for 10,000 bitcoins. While this may have been a start it wasn’t up until 2011 when bitcoin became the de-facto currency of Silk Road, the infamous black-market website, where people would use it to buy anything from drugs, guns to even buying the services of hitmen, kidnappers etc.
Now this is when things started to get big. By 2013 the price went up to 13.30 US Dollars and in 2014, 1 Bitcoin was worth 770 US dollars. But the moment that made everyone turn heads and pay attention to what was going on was in 2017 where the peak was reached, and it had everyone divided. One side would say that this was just a fluke and that the digital currency would not be able to keep up like this, the others would strongly disagree that by saying that it is here to stay, and it will go nowhere in the future. While in 2018 the price fell by quite a large margin, it is still standing its ground and has paved the way for tens of other cryptocurrencies to enter the market. Bitcoin is the undisputed king if we’re talking about virtual currencies, but we still can’t underestimate the impact that other coins have had on the market.
We are still in an uncharted territory when it comes to cryptocurrencies and we are learning as we go. While by definition Bitcoin may be a virtual currency, there have been other definitions of it. Economists define money as a medium of exchange, a store of value and unit of account and Bitcoin doesn’t represent these qualities in the best sense.
We’ve read that there is an increasing market cap that many people thought would be impossible to reach. However, there’s a catch to that, because most Bitcoin transactions happen on a cryptocurrency exchange and that is not a very positive sight for the future of Bitcoin. In 2016, five of the top 500 US retailers accepted Bitcoin as a form of payment, and in 2018 that number has decreased to three. This mostly happened due to the fact that it takes about ten minutes for a payment to be processed which means that it is highly impractical to use it in a business that values time more than anything. It has also been reported that 17 of the largest crypto merchant-processing services have handled only $69 million this year compared to $411 million in the past year. This may have happened because of the crypto boom of 2017 where the market got bloated in a sense and everyone was investing everything they had, while now many people have withdrawn their investments and the value of the cryptocurrencies has almost gotten back to where it was before that boom.
Bitcoin has also been very difficult to regulate due to its decentralized nature. Eight countries have completely banned Bitcoin. Algeria, Egypt, Morocco, Bolivia, Iraq, United Arab Emirates, Pakistan and Nepal are on that list, and there is also a list of 15 countries that have put an implicit ban on it.
The reason that many of these countries have a profound distrust of Bitcoin is because hacking and scamming can happen quite often and the techniques are just getting more and more sophisticated. There are a lot of Ponzi scams and Bitcoin mining scams that have robbed people of large sums of money throughout the years. The Ponzi scams with Bitcoins are like regular ones where they promise you high daily interest rates. We can see that it has many disadvantages if we try to incorporate it in our daily lives. The technology may still not be on the level needed for Bitcoin to be used on a mass scale.
With that being said, Bitcoin has also many advantages, starting from the fact that it is international, and it is free from the interference of government. I am sure that many people are pleased with that detail. Another very important thing that has attracted many people is the fact that it is transparent. Bitcoin is also something that is impossible to forge. Many people have come to the defense of Bitcoin saying that it will forever change how we see money. People like John McAfee have stated that the cryptocurrency is unstoppable, and it is only a matter of time before it completely takes over. Important is that you inform yourself about the current value and further development of bitcoin, before investing in it.
Something that started just 10 years ago has managed to become famous in a very short period of time. Even though Bitcoin may have had a dramatic drop in value that some people expected to happen, we can’t undermine the fact that it has been steadily taking over the world. It may take 5, 10 or even 25 years, but the way things are going it is safe to assume that Bitcoin sure has a very bright future ahead. So we expect to hear more positive things about it in the forthcoming years.