An Overview of Bitcoin
2017 can be said to be the year of Bitcoin. The financial industry was dominated by this digital currency that has revolutionized how we think and use digital currency. Bitcoin had been around since 2009, but it was 2017 was when it gained mass popularity, leading to an unprecedented rise in value. So, what is Bitcoin?
The Beginning of Bitcoin
In the year 2009, the world was introduced to the incredible world of cryptocurrencies with the release of the first digital currency, Bitcoin. The inventor behind this great innovation still remains unknown to date but went by the pseudonym, Satoshi Nakamoto. Bitcoin became the first decentralized currency. This means that it is not controlled or regulated by a central body such a federal reserve bank.
Initially, the world was skeptical about this new currency. While the possibilities it offered were beyond what many had imagined, they were not convinced that a currency can be stable without being controlled by a central authority. However, Bitcoin continued gaining the trust of many as the developers continued strengthening the platform.
How does Bitcoin work?
Bitcoin and all the other cryptocurrencies are based on a technology known as the blockchain. The blockchain is a decentralized, public ledger where all the transactions are recorded. Bitcoin is thus a digital currency which is transferred between users on the blockchain. Bitcoin takes the monopoly of the financial sector away from the central authorities and instead distributes it to the millions of users across the world.
Bitcoin is different from the normal currencies or fiat currencies like the US dollar and the Japanese Yen in various ways. The first is that it's decentralized. Federal Reserve banks across the world exercise control over fiat currencies but Bitcoin has no central control. Second, Bitcoin has a limited supply. New Bitcoins are generated every hour at a diminishing rate by miners all across the world until the day the supply hits 21 million coins. This is made certain by an algorithm. Fiat currencies, on the other hand, can be produced at will by central banks which make them easy to manipulate. Other differences include anonymity of users and the divisibility which aren't offered by the fiat currencies.
Mining is the process by which new units of Bitcoin are introduced into the supply. The process of mining is carried out by specialized programs that are run on computers. When a Bitcoin user carries out a transaction, this transaction has to be verified before it is recorded on the blockchain. The miners are the ones in charge of this process. The programs in charge of the mining verify these transactions to ensure that they are legitimate and that no double spending takes place. The miner then gets a block reward for lending his computing power to the Bitcoin system. The reward is in form of Bitcoins. This is how new units of Bitcoin are generated. The block reward reduces over time as the maximum number of coins to be mined approaches.
Bitcoin's Current Uses and Value
Bitcoin is the undisputed market leader in the cryptocurrency world, a position it has held since inception. Having been the first cryptocurrency, it is the most widely used and accepted all over the world. The current value of Bitcoin is $10,585 per unit, giving it a total market capitalization of $178 billion. This is an incredible rise from its price which stood below $1,000 just a year ago. It is, however, a drop from its all-time high price which it hit in the days leading to Christmas last year of over $18,000.
Bitcoin has become increasingly accepted all over the world as a form of payment, with merchants switching to the new, very affordable, private and secure mode of payment it offers. The government of Japan has even accepted it as a legal payment method. Some of the renowned merchants that accept Bitcoin include Expedia, Overstock, Wordpress, Microsoft, Subway, Shopify stores, Virgin Atlantic, Domino's Pizza and many more.
What's The Future For Bitcoin?
Bitcoin's popularity is rising by the day all over the world. Many governments have recognized Bitcoin's ability to completely overhaul the financial system and offer the people an easier, more convenient, secure and affordable alternative. This has led them to form commissions to investigate the best way to integrate Bitcoin into the financial system. This will result in more nations joining Japan in recognizing Bitcoin as a legal means of payment which will drive its price through the roof.
Bitcoin will continue to attract more users and more merchants will start to accept it for payments. The price will continue to rise and will surpass its all-time high price very soon. The financial system will be centered on Bitcoin, with banks, insurance companies, investment funds and many more sectors turning to the transformational advantages it offers to solve many of the problems they currently face.