Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. It is what is known as a cryptocurrency and is the first decentralised payment system in the world. This means that transactions are made with no middle men i.e. no banks! There are no transaction fees and no need to give your real name when transacting with others. Year on year the popularity and acceptance of Bitcoin increases with more merchants beginning to accept the currency in their payment options. Right now you can buy a huge range of products and services with Bitcoin including web hosting services, pizza and even manicures.
Why is Bitcoin popular?
Bitcoins can be used to buy merchandise anonymously, they offer an easy international payment with no fess or regulation and small businesses may benefit from the no fee structure. Furthermore, Bitcoin is popular as an investment option with a few wins in past years, however, it is still volatile with little known about where this new technology will end up in the future.
You can buy Bitcoin from several marketplaces called "Bitcoin exchanges." These exchanges allow people to buy or sell Bitcoins using different currencies and trade it against other currencies. Furthermore, people can easily transfer Bitcoin to each other using mobile apps or their computers. It's a similar concept to how we currently do "online transfers" and you can acquire Bitcoin by accepting them as payment. The other way to acquire is to "mine" it – just like gold. However, the mining of Bitcoin is done digitally and is to be honest, complex. In its most primitive version, it is where people compete to create find the solution to a complex mathematical algorithm or puzzle and the person that finds the solution is awarded new Bitcoin. This is also how new Bitcoins are created.
What affects its price?
Bitcoins are stored in a "digital wallet," which exists either in the cloud or on a user's computer. The wallet is a kind of virtual bank account that allows users to send or receive Bitcoins, pay for goods or save their money. Unlike bank accounts, Bitcoin wallets are not insured by the FDIC and the safety of these digital wallets are still unknown. Wallets that are in the cloud are open to hackers and there have been instances of people losing their Bitcoins in this way. If you keep your Wallet on your personal computer you are open to Virus attack or just like in the real world when you lose your wallet, you could delete them…
The price of a Bitcoin has jumped up and down since it first entered the mainstream consciousness in 2013. That year prices rose by almost 10,000 percent before the collapse of Mt Gox, the biggest online Bitcoin exchange, sent it crashing.
Prices slowly crept up after that but have since surged again. This is largely put down to regulators appearing to warm to Bitcoin and the rise of initial coin offerings - a way for projects to raise money by selling cryptographic tokens similar to Bitcoins. Many skeptics believe we are in the middle of a new Bitcoin bubble while advocates say we are just beginning to see the rise of Bitcoin.
Though each Bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs are known. While that keeps Bitcoin users' transactions private, it also lets them buy or sell anything without easily tracing it back to them and in turn is one of the top methods of choice for people buying illicit contraband online or paying for illegal services.
Future in question
No one knows what the future of Bitcoin encompasses or how it will play out. Right now it is a largely unregulated industry and system, however that could change if it continues to garner investment and support from the mainstream. Governments are concerned about taxation and their lack of control over the currency and also how it will affect international dollar values and economic activity. As an investment Bitcoin is a high-risk, highly volatile choice and the current lack of regulation creates a question to its validity as a long-term, income-producing investment asset in anyone's portfolio. This is a brief overview of the Bitcoin phenomenon and we strongly urge you, as with all investments, to ensure that you complete thorough and complete due diligence before venturing into new waters… or markets as it may be.