Have you heard about Bitcoin recently? The market and the world is wide awake with cryptocurrency curiosity. Before you rush out and become part of the recent Bitcoin mania that has driven its price to record highs, you might want to take a step back and analyze this new-age financial instrument.
What’s so great about Bitcoin?
Bitcoin has seen a surge in popularity due to its independent, decentralized nature. What this means is that the Bitcoin price is not controlled by any government or central bank authority. This makes the cryptocurrency popular with anyone that is concerned with the current state of global monetary policy and the devaluation of global currencies as a competitive strategy employed by a nation’s central banking authority.
Bitcoin does not have any restrictions on its ownership, transfer, or sale. Many savvy investors have seen this as an opportunity to circumvent the banking system and avoid currency capital controls in place by their local government.
Bitcoin’s price is directly linked to market supply and demand. When Japan recognized Bitcoin as legal currency in April of 2017, a Bitcoin mania began in the far east that has seen the price of BTC rise by over 200% this year alone.
The market has adopted Bitcoin due to its anonymous nature, with no recording of ownership ever falling into government hands. However, being aware of the security around protecting your Bitcoin from hackers is essential. In the offline world, criminals may scan RFID chips to obtain your personal data for fraud, it is easy to remedy this issue with a RFID wallet from https://www.ibricraft.com, however, Bitcoin is exposed to a variety of virtual threats that are just as significant.
When you purchase a Bitcoin, you are issued a unique key code. If this code is lost, you will lose access to the Bitcoin indefinitely. Hackers have used this vulnerability to create malware that steals these codes when they are cut and pasted between programs or apps.
Bitcoins shady past
Bitcoin was developed in 2009 by Satoshi Nakamura. Interestingly enough, no-one knows the identity of this man. When the name is translated from Japanese to English, Satoshi Nakamura means ‘without face’, further adding to the cryptic origins of the world’s most popular cryptocurrency.
Bitcoin’s first commercial application was rather shady. It was the premier currency used by criminals to pay for goods and services on the notorious ‘Silk Road’ website that was shut down by the FBI in 2012.
Bitcoin is still the choice of currency for online criminals, as can be seen in the recent ‘Wannacry’ ransomware attacks that infected hundreds of thousands of devices all around the globe. The hackers demanded payment in Bitcoin, as the nature of the ‘Blockchain’ registry allows the owners of Bitcoin to remain anonymous.
Previous Bitcoin bubbles
Bitcoin is well-known for its volatile pricing. When it was first released, Bitcoin was valued at $0.99 cents. The first Bitcoin bubble emerged in late 2012 and saw the price rise to surpass an ounce of gold for the first time, breaking through $1200 an ounce.
The bubble bursts shortly thereafter in 2013 when a Bitcoin exchange based in Japan, known as Mt. Gox, was penetrated by hackers and their entire holdings stolen. The Bitcoin price plummeted down to $200 within days and stayed there for much of the following two years.
In 2015, Bitcoin once began its meteoric rise to new price highs as Chinese oligarchs learned of the ability to use Bitcoin to circumvent capital controls imposed on Chinese citizens. Being that most of the Bitcoin mining power and the majority of Bitcoin exchanges are based in China and Japan, the mania began to accelerate well into 2017.
When Japan announced that it recognized Bitcoin as legal tender earlier this year, the price suddenly exploded, with some exchanges charging up to $4000 per Bitcoin. The Japanese and Chinese has realized that their governments are inflating the value of their currencies away with massive money printing operations known as ‘quantitative easing’.
Thus, the flight into Bitcoin could be just the beginning of the latest Bitcoin bubble, or it could be the beginning of the end. Experts are undecided on the fate of Bitcoin going forward. Some have argued that the technology is already obsolete, with newer cryptocurrencies, such as Ethereum, paving the way forward for cryptocurrency technology. Others still believe Bitcoin has tremendous potential upside in the near future and the price could triple before the end of 2017.
The future for Bitcoin
Whatever the future holds for Bitcoin is uncertain. One thing is for certain, mania’s do not last and bubbles burst, how long this current bubble has left to run is anyone’s guess.