Cryptocurrency Explained #1: Bitcoin
Bitcoin is a decentralised digital currency which uses peer-to-peer technology to operate and that means there is no central authority. Transaction and money issuance are carried out collectively by the network.
I believe everyone has heard of Bitcoin. It is the first cryptocurrency created in 2008 by a person who calls himself Satoshi Nakamoto, whose real identity is still a mystery till today. And that’s how it all begins, mining of Bitcoin.
In the beginning, there was no monetary value as it was only mined and not traded. As the idea of decentralised and encrypted currencies became popular, more and more alternative cryptocurrencies appear, usually offering faster speed, anonymity or some other advantage. Soon, Bitcoin grew in value and upon reaching $1,000 in 2013 for the first time, it started crashing. That was the first time 850,000 Bitcoins disappear and never found even until today.
Nevertheless, in 2017, there was a gradual increase in the places where Bitcoin could be used. This led to a skyrocketing of Bitcoin value to a value of all time high of close to $20,000. What’s even more shocking is in just a few days later, Bitcoin had a 30% drop in value.
Freedom in Payment: You are in control of your Bitcoin as there is no central authority figure in Bitcoin Network. No one can prevent you from sending or receiving Bitcoin from anyone, anywhere in the world.
Control and Security: You are in control of your transactions and bitcoin transactions are secure, irreversible and does not contain any personal information. Unlike a credit card/debit card which requires you to enter all your info like CSV number, which subjects your data to be stolen, Bitcoin uses two keys, public key and private key. The public key is for everyone to see, but all you have to do is to keep your private key safe.
Transparent: All finalised transactions are for everyone to see. Anyone can verify transactions in the bitcoin blockchain. No transaction can be manipulated as Bitcoin is cryptographically secure.
Risk & Volatility: With a limited amount of coins and increasing demand of them, Bitcoin has become highly volatile. It is expected that the volatility will decrease in times to come.
Infancy Stage: Bitcoin is undergoing development to make the digital currency more secure and accessible to the masses. There is still potential for Bitcoin to grow but how fast or how soon, its unpredictable.
Lack of Recourse: Due to Bitcoin being decentralised and no central authority has control over it. If your online crypto wallet is hacked or you were to make the wrong transaction, there is no way to get your coins back or for you to undo the transaction.
There you have it, the pros and cons of Bitcoin. As always, before deciding to invest in anything, do research more before finalising your choice.