What Should I Know About BitCoin & Cryptocurrency
You’ve probably seen the influx of Bitcoin documentaries on Netflix, maybe you’ve even sat through a few.
If you’re still lost about the exact mechanics of cryptocurrency and what it actually is, we would love to tell you that you’re not alone, but you might be! The popularity of cryptocurrency has skyrocketed in the past decade or so, but its history dates back long before that.
The concept of digital cash and token money to emulate physical money dates as far back as the 1980s. The notion of Digicash was explored by American cryptographers in the Netherlands, and Bitcoin – one of 800 types of cryptocurrency – is an extension of this exploration.
If you get caught in a dinner party conversation, and the topic veers towards Bitcoin and cryptocurrency, we’ve got you. Here are some things that you can keep in mind as you navigate the world of digital money.
The Founder of Bitcoin
The founder of Bitcoin, as everyone knows (or doesn’t know) is a mystery. Bitcoin was invented by an unknown figure (or group of people) under the name Satoshi Nakamato. A quirky and brilliant coder, as known by the people he interacted with virtually, Nakamato has yet to disclose any personal information to this day.
There has been much speculation about Nakamoto’s identity, with curious eyes reading into timestamps and the language used by Nakamoto on forums. Some have pointed fingers at other famous cryptographers like Michael Clear as the man behind the Nakamoto identity. Such accusations (and they are indeed one of many) are from a deep analysis of 80,000 words of writing by the mystery man himself.
When it comes to the founder’s identity, fingers have been pointed at big names in the field – only for these claims to be denied. The true Nakamato (or the group that operates under this handle) is still very much at large.
Bitcoin Has No Central Command
One of the fundamental concepts of cryptocurrency is the lack of a centralized unit of governance in its trading and exchanges. Anyone can use and trade Bitcoins, however, it is not owned by any single company.
With a decentralized digital currency, there are also no central servers to process or store these transactions. Governing or financial authorities such as banks cannot block the exchange of Bitcoins freely within the market. As the process is irreversible, all transactions are final, and there are no customer service representatives that mandate or support these transactions.
If you make a mistake in your transaction, there is truly no point in you crying over the spilled milk (or coin).
How much is a Bitcoin?
Well, that depends. Very much like foreign currencies and its fluctuations, the Bitcoin price is driven by the mechanics of demand and supply. 6 years ago, a single Bitcoin was worth less than a US dollar. Today, the price of a Bitcoin stands at about SGD$10,016.14 (base on November 9, 2017, 12noon).
The increase in price is thus governed, primarily, by the exponential increase in demand and use of Bitcoins. This is because the supply of Bitcoins is limited at 21 million Bitcoins in circulation. With a capped supply, this could mean that the price of a single Bitcoin will continue to rise provided users are drawn to its utility and pricing.
So how much is a Bitcoin? It depends when you buy it.
People like to talk about the juicy stuff, and Bitcoin is definitely not free from it. If you’ve understood how Bitcoin works so far, you’ve probably noticed some weak spots and an apparent vulnerability to the currency.
These digital wallets are susceptible to hackers, and with anonymous transactions, it sets up problems in tracking culprits who are capable of stealing millions of dollars. A major Hong Kong based exchanged was suspended for this very reason, amounting to a loss of 65 million in the virtual unit.
With the power of cryptocurrency being anonymity, there has also been heavy debate about Bitcoin being used for illegal purposes. The notorious Silk Road operated as an online black market, with illegal drugs sold by users who were untraceable due to the transactions being Bitcoin-based. The site was eventually shut down with its founder sentenced to life imprisonment. So law enforcement is not entirely omitted from the picture.
Despite the scandals, the rising price of Bitcoin and the digital’s age intrigue with digital currency are definitely the stuff of nightmares for regulators. Ultimately, it could mean that cryptocurrency is here to stay for now, and it’s not likely to sit quietly. This disruptive form of currency is a showcase of how technology and design can come together to create something truly groundbreaking.