Bitcoin in a Nutshell
Bitcoin is a "cryptocurrency", an internet-based currency that has now become a household name. Bitcoin was created by the mysterious Satoshi Nakamoto, a 37 year old man reported to be living somewhere in Japan. Although Nakamoto's true identity remains a mystery, one thing is clear, he's certainly a pioneer in digital technolgy.
So what's the big deal over bitcoin? And more importantly, why should you pay attention to it?
Unlike traditional notes and coins printed and used all over the world, bitcoin is different in that it is completely digital. It can be used to transfer from one country to another, and converted to the local currency on demand. It is therefore a completely decentralised currency, an independent currency that is not owned or controlled by any government or institution. But like other currencies of value, Bitcoins worth is in it's limited supply, it has a fixed limit of 21 million Bitcoins.
When Bitcoin was first made public in 2009, it's value was very low and there were very few places to trade it. At the time, it was reported that a man had gained about 10,000 bitcoins, but he couldn't find anyone or anywhere to trade his cryptocurrency. The only place that would take his bitcoins was a pizza shop. And at the time, the 10,000 bitcoin brought him two pizza's. But fast forward 8 years later to 2017, and that same number of bitcoin would buy more than two pizzas - in fact it would buy more pizza than anyone can eat in a lifetime! The estimated worth for the man's bitcoin is a whopping $77.5 million Australian dollars!
So what can you do with bitcoin? And what does the future look like for this digital currency?
As with any new technology, it takes time for people to understand and trust the technology before it can gain traction. At the moment there is no huge demand for bitcoin, but this story will likely change over the coming years as globalisation, mobile technology and online shopping continue to shape consumer behaviour.
Here are some ways in which people and businesses currently use bitcoin:
With Bitcoin, it's possible to send and receive money anywhere in the world without paying any transaction fee. In fact there are no physical limitations, and therefore there are no fees, such as transaction and conversion fees.
Currently there is little to no fees paid using bitcoin as a payment method. Users however may opt to pay a fee in order for the transaction to be processed more quickly. Even if you choose to pay a fee for your transaction, the fee is much lower compared to the 3-5 percent transaction fee charged by many financial institutions.
Bitcoin is an independent currency, and no single government or institution has control over it. This means that bitcoin can be used by anyone in the world to make payment to another person who accepts bitcoin. It can later be converted into the local currency on request.
A Bight Future
Mobile payments are on the rise, and as you would expect, many people want to put bitcoin's peer-to-peer payment system and blockchain technology into use in the financial sector.
Bitcoin's technology offers unprecedented possibilities, and there is a great deal of potential hidden just below the surface. Bitcoin is open-source, meaning that the world's brightest minds can integrate and change bitcoin's technology to meet the needs of the people.