Before we learn about Bitcoin, it may be safe to know a bit about what cryptocurrency is for those who are not yet familiar. In today’s age, the new form of money is a virtual currency and that is where cryptocurrency comes in. It has the same usage as the physical currency. You can use it to exchange for a service or certain goods. Think of it like a token or a casino chip where you have to use real money in exchange for the virtual one.
Now, with over ten thousand cryptocurrencies launched by different companies out there, Bitcoin has become the most popular of them. In this article, we will learn more about this type of cryptocurrency.
History
Bitcoin emerged as a result of a massive global economic crisis back in 2008. It was introduced by a pseudonymous person or group called Satoshi Nakamoto. A cryptography mailing list was posted by Nakamoto wherein the concept of Bitcoin was laid out as a decentralized and digital currency.
This very concept eliminates the idea of having intermediaries when handling money or doing any monetary transactions. It did not have any monetary value for its first few years. It was not until 2010 that the first purchase using Bitcoin started. It was a famous story about a guy who ordered pizza for 10,000 bitcoins, and at that time, the value of 10,000 was just over $41. “Bitcoin Pizza Day” is now being held every May 10 to commemorate the very first and successful transaction made using bitcoin.
How it Works
Ever heard of blockchains? Blockchain technology is the one that they are using for cryptocurrencies like Bitcoin. Essentially, it is a decentralized ledger or otherwise known as Distributed Ledger Technology spread across computers that records every history of ownership of a particular digital asset.
It is designed to be transparent and unalterable. These digital assets are distributed instead of being copied or transferred thus creating a record of an asset that is not susceptible to change. For example, you are creating a document and you wanted to share it with a group of people by means of distribution. The process then creates a decentralized distribution chain that will give everyone in that group the same access to the distributed document at the same time.
Any changes or modifications that will be made in that document are recorded in real-time, and everyone can see those changes. This technology then makes it very appealing to the public because it reduces financial risk for those who wanted to invest their money and it also runs down potential frauds or scams.
Pros
Virtual money can bring out a number of advantages as compared to the old form of money. One of the advantages of this kind of money is that inflation will not be a problem.
It does not have a central body to control it and since it is stored digitally, it allows the user to make a quick transfer of value to and from wherever the user wants it to be placed. How is it then that this type of money has so much allure to people today?
Now, as mentioned earlier, Bitcoin does not have a central body. For our physical money, it is always regulated by a central supervisory body and the number one example for that is the bank. People who have money entrust a “responsible party” to keep their money while these “responsible party” are being paid a commission.
Inflation is the least bit of worry when it comes to Bitcoin because the amount of this currency is fixed and limited, unlike physical money, where an increase in production causes inflation. To date, it was predetermined that 21 million coins would come into the world through the process of crypto mining. As of now, there are approximately around 18.5 million Bitcoins existing, and the rest are still to be recognized.
Because Bitcoin has become so big, it’s one of the most traded cryptocurrencies in the world. This leads us to crypto exchange platforms, which you can use to buy and sell Bitcoin and other currencies. For beginners, you should definitely choose a reliable platform that can give you the maximum benefits. In Australia, for instance, Debt Bombshell outlines the best crypto exchange platforms in the country, some of which are locally based and can provide better customer support. Depending on where you live, the best platform for you may be different.
Cons
Of course, every pro has its cons, and Bitcoin is not excused for having a negative image. Since Bitcoin is solely handled personally, the major con for this one is the responsibility for keeping and using it, unlike banks offering financial advice and keeping tabs on how you use it. Another negative image of Bitcoin is that it has reverse criticism for its transparency. Some people have hoped for its provision of anonymity but were proven otherwise. The responsibility and accountability for its storage and preservation are in the bitcoin owner’s hands.
One other downside for this cryptocurrency is its high volatility in the market. The volatile phenomenon is not uncommon in the crypto market since it is still an emerging market, unlike the traditional currencies or even gold which are more stable and established. A thing called “speculative bets” is the main reason why there is high volatility in cryptocurrencies. Investors from around the globe would bet that the prices would either go up or down in order to make a profit. These kinds of bets then can cause an unforeseen influx of money or a sudden outflow which leads to high volatility.
In conclusion
Bitcoin has really brought and will still bring with it a monetary revolution. With its current value that stands at about $700 billion today, its future looks very promising. We can only hope that once Bitcoin or cryptocurrency in general stabilizes, it will be possible to use Bitcoin to pay with our daily transactions. That would mean that everyone from large financial entities down to the smallest investors who want to venture into something new and have fun at the same time is already there. It will not hurt to read more about this currency to understand it better and be updated on the news related to Bitcoin.
