London, England, 4th Nov 2021, Bitcoin is a virtual currency or cryptocurrency. It was created in 2009 by an unknown single person under the pseudonym “Satoshi Nakamoto.” While Bitcoin has garnered significant media attention recently, it has been around since 2008. Recently, Bitcoin has undergone rapid growth with its value increasing 125% over time, leaving many to wonder what Bitcoin is, how it works, and why it’s currently skyrocketing in value.
Bitcoin is a decentralized digital currency. FinancialCentre Broker Dennis Vinter says that at its most fundamental level, Bitcoin represents an online version of cash for paying for goods and services. Like cash, Bitcoins are untraceable. Unlike cash, however, they can easily be transferred worldwide at almost no cost thanks to near-instant processing times. This ease of transfer creates problems regarding taxation – if you’re paid $100 USD worth of Bitcoins today and spend the next week on groceries that cost $75 USD then technically you’ve profited $25 USD even though that $25 was never deposited in your bank account. Because of this, many governments have been hesitant to regulate or even acknowledge Bitcoin.
Why is it skyrocketing in value?
Bitcoin has seen unprecedented growth in the last few years. This growth has been driven by both its increased acceptance as a form of payment and the fact that it can be easily transferred worldwide. However, many are unaware of how Bitcoin is created. Mining for Bitcoins requires significant computational power (and thus electricity usage), which means that more expensive hardware must be used to mine more Bitcoins at once. Because of this, even recent price drops have not significantly decreased the high energy costs associated with mining. For this reason, some are predicting that Bitcoins may soon become unprofitable, which would limit their value.
Bitcoin has also recently seen significant growth because of its speculative nature among investors hoping to make quick profits. Because the cryptocurrency is decentralized and unregulated by any official government, its future value remains unknown but predictions range from $0 to thousands of USD per coin. This speculation has led to extreme volatility in the market as Bitcoins rise and fall in daily value. This trend will likely change once investment reaches more stable levels without crazy speculation over the future values of the currency itself.
The distinct nature of the digital token facilitates illicit activities such as money laundering and tax evasion due to its lack of ties to any official financial institutions. Because Bitcoin is not tied to any government or other form of authority, it is considered a rogue currency by some, while others believe it will continue growing in acceptance and value.
Some qualities of Bitcoin?
The biggest quality of the token that makes it this huge is its anonymity. When a transaction is made using Bitcoin, there isn’t any personal identifying information tied to the purchase other than an address that the currency is sent to. From an individual standpoint, this means your purchases cannot be tracked by outside sources. From a business standpoint, this means your transactions are completely anonymous as well as untraceable – which has led many to accuse the currency of facilitating criminal activity.
Bitcoin is decentralized, meaning no one person or entity can affect its value. The token is not tied to any country, bank, or other official financial institution. It is completely unregulated by any authority (similarly to other forms of digital currency like Paypal and online banking), which have both made it popular among its proponents and caused governments to be wary of its use.
The value of the currency is kept relatively stable due to the fact that Bitcoins are limited in number – new ones cannot simply be created at will. This means that an increase in demand will only lead to a price rise, not inflation of the currency itself. This is another aspect of the currency that has made it attractive to investors, while also potentially limiting its future value.
What’s next for Bitcoin?
Mr Graham Jenkin, CEO CoinList says that he can see the digital tokens crossing the 100,000 dollar mark by the time we enter next year. Mr Vinter says that in reality, he meant that bitcoin is going to be big but he actually thinks it’s going to be a lot bigger next year and the year after that. He himself agrees to what he said in the following words “I see a bright future for Bitcoin. The value of these things is just going to go up and up. You just have got to get a massive stash of them, lock them away and forget about them for ten years. Then hopefully you will make a fortune out of it.”
Bitcoin has seen significant growth in the past year, which has led to extreme volatility. For this reason, it is hard to say for many experts where the future value of Bitcoin will lie or if it will even be profitable in the long term. However, many are predicting that with speculation dying down and less crazy investment rises, there likely won’t be any substantial changes in where Bitcoin is today.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Daily Michigan News journalist was involved in the writing and production of this article.