Introduction of Bitcoin
Bitcoin is a digital currency officially launched in January of 2009. It is believed that the currency was created by a group of programmers using the name Satoshi Namamoto. It was released as an open-source software because it had no value when it was invented. Anyone with an internet connection can participate and use bitcoin. The currency is "decentralized," meaning it is not controlled by any one organization. Instead, bitcoin is controlled by the users who purchase or earn bitcoins. "Miners" are people, often programmers, who record bitcoin transactions, helping to determine accurate value. These miners are also paid in the currency.
How is Bitcoin Used?
A first time user of bitcoin must download a virtual wallet which can be found here: https://www.bitcoin.com/choose-your-wallet. Once the virtual wallet is downloaded, the user will be given a bitcoin address, which is made up of 27-34 letters and/or numbers. This address is shared with another person who is paying the user, and the code enables a user can receive the currency safely. It is the equivalent of a virtual bank account, but the bitcoins are entirely owned by the individual and not a bank. Bitcoin addresses are usually used only once and can be totally anonymous. The computer company Dell became one of the first major companies to start accepting the currency in 2015, and many other companies, such as Domino's Pizza and Microsoft, followed suit. Even travel and hotel rooms can now be paid for in bitcoins within some European countries.
The current value of bitcoin (July 17, 2017) is $2,179.80 USD per unit. This is significant, as 8 years ago the currency was worth virtually nothing. Beginning in December of 2011, bitcoin slowly rose from $2 to $13 over a year long period. In November of 2013, bitcoin surpassed $1000 USD in value for the first time, but the next few months saw the price fluctuate until bitcoin was valued at it's lowest price in almost 2 years. Since then, bitcoin's value has become somewhat unpredictable month to month. Bitcoin reached it's all-time high of $3000 USD per unit on June 12, 2017. The volatility of bitcoin is a major argument that critics use against the currency and others.
Impact on the Traditional Economy
Bitcoin is valued in United States dollars. In March of 2017, bitcoin surpassed the value of an ounce of gold for the first time in it's history. The Wall Street Journal even reported that bitcoin was beginning to show more long term stability and potential than gold in 2016. There are currently 15 million bitcoins in use at this point in time, and the currency is not reproduced as easily as traditional money. This is in order to retain bitcoin's value and to avoid inflation risks associated with traditional currencies. There are a few bitcoin ATM machines in North America and Europe. The success of bitcoin has spawned countless other online or virtual currencies trying to compete in the same market.
About the Author
Justin has a Bachelor's degree (Honors) in Political Science and Media and Communications, specializing in modern Middle Eastern politics. He has been writing for World Atlas since September 2016.
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