Bitcoin is digital currency (cryptocurrency) that will change the way we use money.
This currency will help with Identity fraud, but can be used in negative ways.
It uses a structure called Blockchain that records every movement of the currency.
The government doesn’t regulate it, we do.
What is Bitcoin?
Bitcoin is a digital currency (cryptocurrency) that was developed in 2008 with the intention of creating a global currency without the interference of the financial sector or government.
To acquire a Bitcoin, you need to use computing power to solve certain complex equations and algorithms (the process on how to solve certain problems). You receive this Bitcoin after the process is complete. After the Bitcoin is ‘mined’ (the process your computer goes through to acquire bitcoin) you can sell as much or little as you want. Think about this process like someone actual mining for valuable jewels. The miner actually mining is like the computer solving the equations. The computer finishing the equations is like the miner finding a chunk of gold.
Compared to conventional currencies, you don’t need to buy a full bitcoin: you can buy 0.00000001 of 1 Bitcoin.
This makes it easier to get into buying Bitcoin as it is currently worth £7300/$9800 per Bitcoin. This is the money of the future.
The Entrance of Bitcoin into Our Everyday Lives
Increasingly, more entrepreneurs and small business owners are coming from the generation known as the millennials. When looking at this generation, we see a large interest in cryptocurrencies. Entrepreneurs want to use this cryptocurrency because it decentralizes (no central authority) the government in the financial sector i.e. removes their influence. Small businesses will start to accept this Bitcoin as a line of payment in the purchase of a product or service. Once small businesses start to accept this cryptocurrency, it will increasingly take over the financial sector and force other businesses to do so as well.
Bitcoin, like every other currency, provides a way of verifying the transactions. For most cryptocurrencies, this verification process is called “Blockchain,” (a digital structure that records every transaction of the Bitcoin with a very secure system) which forces those who mine the Bitcoin (miners) to validate the accuracy of every transaction. This protects users from fraud.
Once the Bitcoins are in circulation, the transactions do not require one’s personal information in order to be completed. Without this information, any purchase on the Dark Web (the part of the internet that isn’t accessible through typical search engines like Google or Bing, where highly illegal products are bought and sold) cannot be traced back to a certain person. The only public information accessible is the wallet number associated with an account. A Bitcoin wallet is the equivalent of a bank account, but is virtual and holds the Bitcoin. This is great for those who want to make a purchase on the web in secrecy, particularly with the rise in cybercrime and identity theft. However, this also increases the risk of money laundering as there is no way of checking who actually bought the Bitcoin.
Bitcoin is a bit of a paradox. On the one hand, it is unregulated by the government; but on the other, regulated by its own market, which means that during a financial crisis (like the 2008 financial crash), Bitcoin should hopefully keep its value, unlike regular currency. Bitcoin will then become the new “gold” since gold is seen as a safe haven during an economic crisis. In the past, during any financial crisis, it was believed that gold holds its value better than cash itself, which led people to put all their money into the valuable jewel. If the currency people use becomes Bitcoin, there will be less concern about the value of the currency decreasing during bad economic times.... ideally!
Over the past few years, the value of Bitcoin has been all over the graph. Since September however, there has been an increase of over 100%. This is due to an explosion in interest over Bitcoin. Since the currency isn’t regulated by government but its users, combined with the increase in interest shown in it, then the increase in value comes as no surprise... The more you mine, buy and sell Bitcoin, the larger in value it will go. We, the people, get to regulate this currency, not the government.