What Is Bitcoin
The Currency of the Future?
Bitcoin is a digital currency, sometimes called a cryptocurrency, where the creation of new units is based on a cryptographic protocol and is not dependent on any central currency management or regulatory authority. This digital currency can be transferred through a computer or other mobile device without ever having to pass through a bank. Introduced in 2008 as a form of bankless electronic cash, the inventor of Bitcoin has chosen to remain anonymous. To this day, no one is really sure of the identity of the inventor.
Servers known as miners handle processing transactions that use the digital coins as money. Transactions are recorded to a peer-to-peer filesharing ledger. The ledger archives transactions and records newly "mined" coins. Under the plan of operation for this digital money, which was also penned by the anonymous inventor, the number of new coins that are mined (or created) with each ledger updated is cut in half every four years until 2140. At this time, the number of new coins being produced will be zero. No new digital coins will be mined and there will be 21 million of them in circulation. Because of the limitation placed on the creation of new digital coins, the coins are allowed to be divided down to eight decimal points. This allows the coins to form an additional 100 million smaller denominations known as satoshis. The satoshi is named after the program's anonymous creator who uses the pseudonym Satoshi Nakamoto.
There has been a growing international interest in this digital money in the wake of several financial crises in various countries. Media interest in the digital money has increased, as well. Along with this increased interest has come an increase in price. The coins started trading at $13 per coin in January of 2013. As of April 2013, the price per coin had risen to $230. Prices have fluctuated since then, rising to an all-time high of $266 later in April 2013 to $70 in June 2013, with a more recent values coming in at between $129-$140.
This digital money is being accepted as real money in places. Countries that don't accept PayPal, for example, are hotbeds for the use of this digital money. It is becoming more widely accepted in Argentina as an alternative to their national inflation-plagued money. It was also recently recognized as a legitimate form of money in the United States by the U.S. courts. This recognition may result in more regulation of the coins which may reduce some of the anonymity associated with its current use. This isn't necessarily a bad thing. Increased awareness of who is using it means increased accountability in its use. This will benefit both U.S. and fiat markets.
The coins are also being used as a financial haven for some investors. After seeing what happened in Greece, where levies of up to 40 percent were placed on money in individual bank accounts, many Europeans have been investing in the coins to ensure their future financial stability by guarding against something similar happening in their own country. However, the liquidity of the coins in large amounts is a problem at the current time. It is easily translated into cash in amounts between $1,000 and $10,000, but not so much in larger amounts. This is likely to change as this new money becomes more accepted among the general public as a legitimate global currency and not just provenance of wealthy or specialized investors. Liquidating larger amounts of the coins will become easier as more nations accept it.
The coins are also being used as a short-term investment vehicle through the process of buying and selling it against the value of the fiat money in other countries. The global currency value of the coins has gone up considerably against some of the world's biggest money players, including the U.S. dollar, the British pound, and the Euro. Though this digital money was expressly designed to be an experimental type of money in digital form, its use as an investment has become more and more popular. Those who are familiar with this digital money and keep up with how it works and is performing in the global markets are making money with it.
While the value of this digital money depends on the willingness of people to accept it as currency, the number of people and institutions willing to do this seems to be increasing. The value of the coins rising along with this increased acceptance. Now is the time to get in on it. It is just far enough under the radar to explode in value when it becomes mainstream. Making money with it depends on investing in it before it becomes widely accepted. If you would like to learn more about this digital money and how you can use it to increase your wealth, sign up to our newsletter to get all of the latest Bitcoin news, tips, and recommendations from the experts.