Bitcoin is the future of currencies because it is designed especially for the digital era. Unlike paper money, it uses secured digital signatures to accumulate and transact funds all over the world. It is the first decentralized digital currency—transaction happens person-to-person; thus eliminating the need for middle men or banks. It is pooled in a digital wallet which you can store in a personal computer, mobile device, online and even paper print-out. And since no banks are involved, transaction fees are significantly lower compared to conventional trading systems.
The concept of bitcoin was first mentioned in a cypherpunk mailing list in 1998 by Wei Dai—he introduced “crypto-currency” which suggested the idea of a new currency that uses cryptography to create and perform business deals without a central authority. However, in late 2008, “Satoshi Nakamoto” published an article entitled Bitcoin: Peer-to-Peer Electronic Cash System wherein he discussed in detail a person-to-person network to create a “system for electronic transactions without relying on trust.” He is dubbed as the Creator of Bitcoin. In 2009, the first bitcoin was issued which Nakamoto mined. Bitcoin mining is how new bitcoins are created and the people doing such are called miners; they are rewarded by a fraction of a bitcoin.
Although it seems that it can be done easily, the mathematical equation behind bitcoin mining is so complex to ensure that there will be no double mining and that new bitcoins will be created at a stable rate. Currently, it is believed that there are at least 12 million bitcoins in existence. Additionally, in August 2013 there is at least US$ 1.5 billion worth of bitcoins exchanged regularly. At present, bitcoins are used in different establishments and transactions. You can use it to buy gifts, online services, apartment rental and payments at restaurants.
In the four years since its creation, Bitcoin grew drastically. As of August 2013, the value of bitcoin in circulation is at least US$ 1.5 billion with millions of dollars traded daily. It is believed that as of late, there are at least 12 million bitcoins in existence and as of press time, its estimated value is $800/btc.
Bitcoin has the ability to provide the same security and convenience of credit but without the excessive fees and longer processing time. More so, payments are settled instantaneously just like cash. In theory, it is more secure than fiat currencies.
Aside from easy transactions, Bitcoins make digital dealings easy especially to those who do not have bank or online accounts. Because there is no need for paper money and a central government to dictate the value of a currency, users can dictate how much it’s worth, thus broader option for purchasing different merchandise.
Bitcoin is a digital currency. There is no need for a middle man; just as long as you have a bitcoin wallet, you can do business anytime and anywhere. Bitcoin exchange rate varies daily because it is bought and sold at different prices against other currencies. However, with your digital wallet, you can manage your bitcoins—know how many you can buy, what is the current value of your bitcoin fund and what merchandise you can purchase.
You might be wondering how it became to have value even if it is unregulated and decentralized. That’s easy—because it is has the characteristics and is a useful form of money. Its value is determined by people willing to accept it as payment. And although it’s still in its infancy stage, it is an economy with a lot of potential.