A Little Bit About Bitcoin
Bitcoin has been around for a while now. It was first created in 2009 mainly in response to the financial crash of 2008. It was conceived as a more democratic form of value without any centralized control by a governing body. It immediately began being traded and used by a small group of techies. But it gained in popularity and started to see wild fluctuations in value over the years. As its value increased, in garnered more attention from the mainstream media and came to attract investors. Finally, the value of one Bitcoin reached around $19,000 before its balloon burst in 2017.
After its dramatic crash it became much talked about. So much so, that its value has started another steady rise. And more investors are taking another look at its investment potential - along with the 2,000 or so other cryptocurrencies. It’s been covered so much online and in the media, that most people seem to have some idea of what it is.
But it may be worth discussing Bitcoin even more. Especially since all cryptocurrencies are not the same. They were conceived for different purposes. They are mined and generate value differently. Some things are even called cryptocurrencies when in fact they are not. Ether, for instance, is not a currency– it’s a commodity.
Bitcoin has a bit of a creation myth. It’s believed to have been invented by one or more people using the name Satoshi Nakamoto. Nakamoto is responsible for authoring the Bitcoin white paper, writing the software and generating the first blockchain entry. He stopped his involvement during 2010, handing over control of all things bitcoin to early contributors, and completely disappeared. His identity and whereabouts remain an intriguing mystery to this day.
Bitcoin is created, or mined, via a proof-of-work model. It takes computer work to keep records in the blockchain. Computers in mining operations are constantly performing complex calculations in order to add more entries to the blockchain. Those calculations are rewarded with Bitcoin.
Despite its ups and downs, Bitcoin is still traded, mined and used in exchange for goods and services. It still has many investors. Some economists have warned against investing in Bitcoin, arguing that it has no intrinsic value since it’s not backed by anything – like gold. But proponents would argue: neither does the dollar. Anything has value as long as people are buying and using them – like Beanie Babies.
Anyone can invest in Bitcoin and either lose or make money. Just like anything else it’s future really depends on its adoption. Some people learn about it and think it’s the future of trade. Others are still skeptical. It’s still too soon to tell how any cryptocurrency will fare.
But it does seem to attract those who can imagine a future with a more free economy. The forward-thinking and the tech savvy are naturally drawn to its decentralized and democratic nature. It answers to the need to move away from unpopular government bailouts and the oligarchic aspect of central banks. Being that children born today are brought up in a world of advanced technology, cryptocurrencies might better fit their worldview. So it would be wrong to discount a cryptocurrency like Bitcoin. It’s highest value may be yet to come.