Everyone who’s been around (and who hasn’t been living in a cave) for the last few years has heard of Bitcoin. Bitcoin is the ultimate crypto-currency, and it has definitely made its mark. But what do you really know about Bitcoin? More importantly, what should you know about Bitcoin, particularly when it comes to what it is, its value, its impact, and its future in the world market? Here’s your complete guide to Bitcoin and the latest and most essential Bitcoin facts – what is it, and what does the future hold?
What exactly is this crypto-currency which has taken over the world?
Bitcoin has distinguished itself from other types of payment such as cash, debit, credit, and even platforms such as PayPal simply because it’s not linked to bank accounts and financial institutions, and it isn’t linked to any kind of personal information, either.
Essentially put, Bitcoin is a kind of digital currency (also known as crypto-currency) which was created and developed by a man called Satoshi Nakamoto. Mr. Nakamoto came up with the brilliant idea of the Bitcoin way back in 2009 as he saw the future relevance of a completely electronic form of currency – a currency which will never be ‘seen’ or minted by any authority. What makes Bitcoin so special is the fact that it cannot be stored in a physical wallet – it’s all in digital form.
In the last 12 months, Bitcoin has assumed a place of prominence, and the possibilities of a global adoption of cryptocurrencies look promising. Here, the popularity of Bitcoin with young adults on a global scale is huge. The growing number of ecommerce platforms that accept cryptocurrencies is the perfect answer to the question: what can you buy with bitcoin?
A decentralized system
When we say decentralized, we mean only one thing: that Bitcoin is not controlled by any organization, financial, governmental, or otherwise. What makes this fact particularly interesting is that when you use Bitcoin for any transaction online, you will not be charged any fee for it. And there are no limits to its use wherever you are in the world, either – you don’t have to think about exchange rates or if your money will actually be accepted based on where you are located. The beauty of Bitcoin’s decentralized system is that it really is a global currency not governed by any borders or governmental or financial regulations.
There is another question asked by many individuals who are interested in Bitcoin but who are confused about who actually issues it. As a matter of fact, Bitcoin isn’t ‘issued’ by anyone. It is mined, similar to gold. Bitcoins are products of computer networks which are peer to peer based, similar to Skype and BitTorrent, which don’t have any central administrator. The computers on the Bitcoin network do a good number of complex mathematical calculations and tasks, which is referred to as mining, and this is when Bitcoins are uncovered. The amount of Bitcoin which could be mined, however, is at a set price of 21 million, and this is why it’s not possible to have an endless flow of Bitcoins (which will only decrease the currency’s value, anyway).
Another aspect which makes Bitcoin a good option for many is its anonymity or pseudo-anonymity to be more accurate. When you use Bitcoin, it will not be connected to your name or address or other confidential information. If you are concerned about your security and safety while making transactions over the Internet, you will be happy to know that Bitcoin can help protect your confidential data since it’s not linked to any of your personal information.
Instant, real-time transactions
We have all taken advantage of the wonders of the Internet, and most of us are connected 24/7, 365 days a year. And with Bitcoin, performing transactions such as sending payments is made much easier since transactions are done in real-time, wherever you are in the world. Also, since Bitcoin accounts are easy to set up and use, you should be able to send and receive Bitcoins without having to wait.
Dealing with Bitcoins is undeniably exciting, as you will well see when we take a look at some figures. For instance, on the 4th of January 2017, the value of 1 Bitcoin soared up to a few cents short of $1,127. After about a week, on the 10th of January, the value of 1 Bitcoin dropped to around $903. If you think about it, that’s about a decrease of almost 20% in just a few days, which makes the currency a bit on the volatile side (but for many, that’s where the excitement in trading it lies as well). Another notable fluctuation happened in 2017. 2017 was actually a significant year for Bitcoin, as it caught the interest of Main Street and Wall Street speculators and investors. With all the interest, though, Bitcoin saw a drop of about 36% in the months of June to July in the same year.
It’s definitely got a lot of potential if you are looking to earn a tremendous amount of money in a truly short time – but the opposite can be true as well, so you always have to be alert and careful.
The main differences between Bitcoin and actual currency
If you’re still unsure of what the real differences are between Bitcoin and actual currency, you should know that there are some major differences. To break it down, the differences are as follows:
- Bitcoin is issued not by a Central Bank like actual currency, but by computers
- Bitcoin, unlike actual currency, is intangible – which means that it cannot be seen or touched like coins and banknotes
- Bitcoin is exchanged in an electronic manner, from peer to peer, while actual currency is physically exchanged
- Bitcoin is not controlled by any bank, individual, or government institution, while actual currency is centralized and issued and created by central banks which have been regulated by the government
- Bitcoin’s value is wholly determined by its supply and the demand for it, while actual currency is valued by the market and the regulation of central banks
- By nature, Bitcoin can be deflationary, but it is not as volatile as you may think. Meanwhile, actual currency is often subject to depreciation and inflation, although its volatility can be limited through the intervention of a central bank
The latest trends regarding Bitcoin
As already mentioned, Bitcoin was able to achieve great heights in the year 2017, especially with the new interest from speculators on Wall Street. But its highest peak came in December of 2017 when its value went up to almost $20,000. Afterward, the market became more stable, so the price of 1 Bitcoin then dropped to about $10,000.
The popularity of Bitcoin is growing even as we speak, even if it has gained some critics. Governments and regulatory bodies have every reason to be a bit wary of Bitcoin seeing as how powerful it can become. In fact, the government of China banned exchanges with Bitcoin in 2017, and the head of the Russian central bank heavily criticized the crypto-currency as well.
However, other governments and regulatory bodies have taken a different view. The Bank of Canada has recently acknowledged that Bitcoin poses some substantial positive effects for different financial markets, and Finland has also recently launched a special payment card (to be used by refugees) which has been based on the Bitcoin ‘blockchain’ innovative technology.
It’s clear to see that Bitcoin has made a significant impact on the world market. No one really knows what the future will hold, of course, but all roads are leading to innovation, even when it comes to currency, and Bitcoin is leading the way.