We live in a world which is changing rapidly and in the field of commerce, the latest innovation that has come up is CRYPTOCURRENCY. A cryptocurrency is a decentralized digital currency that can be used as a payment system globally whose value is determined by demand and supply. BITCOIN is one of the cryptocurrencies, developed by Satoshi Nakamoto released in 2009. Bitcoin users have virtual wallets to store Bitcoin which can be managed using applications that can be downloaded on smartphones, tablets, and personal computers.
The number of Bitcoin that can exist are 21 million and currently, there is 17 million Bitcoin in circulation. One can obtain a Bitcoin by buying them on Bitcoin exchange, accepting for the goods and services or by mining new ones. MINING is the discovery of new Bitcoin. In other words, it is the verification of Bitcoin transactions. Once they are verified they are added to the wallet of the minor and he receives 12.5 Bitcoin for verifying the transactions. Bitcoin is now becoming a major player because it is very convenient to use, especially in the retail market.
Even Bill Gates the richest person in the world said “Bitcoin is exciting because it shows how cheap it can be. Bitcoin is a better currency, in that you don’t have to be physically in the same place and of course for larger transactions currency can get inconvenient.”
Apart from Bitcoin, many cryptocurrencies have been discovered including Ripple, Ethereum, and Litecoin. Bitcoin has the highest value of all digital currencies enjoying first-mover advantage. Its value has boosted from almost nil to its all-time high of around $19,850 on December 17, 2017. The value of Bitcoin highly volatile it has increased over 1600% in the past year though its value has dropped many times. Investors are of the viewpoint that it can create a bubble of investments which may burst any time causing huge losses to people having small investments in Bitcoin.
Although people are willing to invest in Bitcoin because of its high growth rate but its negative aspects must not be ignored. Bitcoin transactions are irreversible and if one’s account is hacked, all his money is lost. Also because it is not governed by anybody, one cannot even file a case against the fraud. Criminals get a platform to carry out transactions anonymously and the biggest example is the ‘Ransomeware attack’ in which hackers got data from some big companies and demanded 25,000 Bitcoin to return the data. Bitcoin proved out to be very beneficial for them as their identity could not be known through Bitcoin, there are many other cases of money laundering. Bitcoin has also been criticized for the amounts of electricity they use in mining.
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In my view, Bitcoin is potentially a good investment but it should be made safer by establishing a regulatory body so that they can keep a check on fraudulent activities. The Bitcoin should be made energy efficient. Also, people should be made aware about the existence of Bitcoin as not even half of the world’s population knows about its existence and people who are using it should be well informed about its pros and cons.