Tag Archives: Bitcojn

Bitcojn, Crypto

Crypto Markets: Basics of Bitcoin

Leave a comment

You hear about it in almost every street corner. It has now become the new currency and it is probably replacing our bank systems. This leaves most of us bedazzled as to what bitcoin really is. Where did it come from and why has it become so popular? You need the answers to this technology question to decide whether to invest in it.

What is Bitcoin?

Bitcoin is a form of digital currency (or cryptocurrency as it is popularly known) which was created in 2009. It is a virtual currency, unlike our paper currencies like the dollar, euro, yen, etc. It is an online cash and its transaction records are stored online by agencies and blockchains.

Bitcoins are rapidly becoming popular with many businesses. Many large retailers around the world have already subscribed to it is usage. In recent times, it has now been accepted globally and is now highly valued. Unlike traditional currencies that are regulated by government authorities like the central bank, bitcoins are independent of these organizations.

Bitcoin is created by many businesses and people through advanced computer technologies that decipher technical mathematical problems. The process is simple. When the computer software successfully figures out these mathematical problems, they reward the bitcoin mines with bitcoins.

History of Bitcoin

Although bitcoin gained popularity recently, it has existed for a long time. In 2008, an anonymous group under the pseudo name of Santoshi Nakamoto published a white paper titled ‘A peer to peer electronic cash system’ proposing that bitcoin should be used for business.

In 2009, it was made available for public use and blockchain started recording and verifying mining processes (processes through which new bitcoins are made) as well as transactions made with bitcoins. It was the year 2010 that bitcoin was assigned value as people started making attempts to trade with them. With time, its value rose to over $1000 per bitcoin. However, in 2013 its price plunged drastically to approximately to $3000. It gradually rose with time till it became about $8000 as of today.

Crypto: Commodity or Currency?

Due to its nature, many are confused as to whether bitcoin is a currency or commodity. In 2015, bitcoin was classified as a commodity by the CFTC (Commodity Future Trading Commission). A body tasked with regulating commodities in the US and like other cryptocurrencies, they have been considered to be commodity under the exchange act. Also, they are considered as currencies because they fit properly into some of the description of currencies in the following ways:

  • Bitcoin circulates as a medium of exchange
  • Bitcoin is generally accepted and have gained prevalence
  • Bitcoin is used as a form of barter trade

In general, bitcoin can be said to be both a commodity and a currency; just like many commodities that have served a similar purpose in the course of history like diamonds, gold, and salt.

How was Bitcoin Created?

Bitcoins are created through a painstaking process called mining. This is done with is the use of specialized computers to solve a complex computational problem; so as to process and record all bitcoins or transactions. When done successfully, bitcoins are awarded to the computer which is for the owner to keep. The mathematical process becomes more complex to unravel as the days go by.

Why was Bitcoin Created?

Like many other things in life, bitcoin has a reason for its emergence. It was not just stumbled upon by a group of people who thought “hey, we could make a nice form of currency”. The emergence of bitcoin was purposeful and well thought of. According to the crypto experts, Santoshi Nakamoto (anonymous pseudonym), had the following goals:

  • Remove third-party intermediaries that are needed for conducting online monetary transactions. The cost of these services requires lots of money which is then passed on to the end-users.
  • Eliminate the financial limitation of transferring money online. There are certain limitations on the amount of money a person can transfer per day. With bitcoin, such limitations are eliminated.
  • Create a decentralized monetary system whereby money is sent from peer to peer without any regulatory third-party. Since bitcoin is not owned by anyone, it is controlled by all bitcoin users in the world, this goal was achieved.

How is Bitcoin Different from Fiat Currencies?

Bitcoin as we have discussed earlier is a decentralized peer to peer monetary system. This makes it stand out from the traditional paper currency. Other ways in which bitcoin is different include:

  • Bitcoin is not regulated by a central government financial institution like the central bank or other banks for that matter.
  • Bitcoin’s transfer process is easier, faster and does not incur charges which are placed on end-users.
  • Bitcoin doesn’t flow through the banking system but from one company to another.
  • Bitcoin’s decentralization makes it widely accepted throughout the globe.
  • Bitcoin’s anonymous users can transfer and receive bitcoin without personal information required.

How Does Bitcoin Work?

Since bitcoin is not managed by a regulatory system but by people who process transactions called miners. The next question that originally comes to mind is ‘how does it work?’. All bitcoin transactions are recorded in a public log called blockchain (a list of blocks that are fused using cryptography which is a method for solving codes

Bitcoin miners ensure that all bitcoin transactions are legit and documented by cataloging all bitcoin transactions within a time frame into a block and fused with a sophisticated cryptography. This process makes it impossible for an owner to send the same bitcoin twice

How to Get Bitcoins?

You can get bitcoins through the following ways:

  • Buying Bitcoin with real cash
  • Receiving Bitcoin as a means of payment
  • Finding Bitcoin through the process of bitcoin mining

Crypto Markets: Security and Privacy

Bitcoins are to some extent relatively secure as it will be almost impossible for someone to steal your bitcoins by faking your identity. This is because when you create your bitcoin wallet, you are given two keys, a public key, and a private key.

Public keys are used for transactions, especially when bitcoins are being transferred to you. Private keys are a set of numbers that must be closely guarded, this is because it is your identity. Without these set of numbers, it will be impossible to get access to one’s bitcoins. However, in the circumstance when your private keys come into the knowledge another, your bitcoins can be stolen. Also in technical sense, your identity cannot be faked, because your personal information is not a requirement to complete a bitcoin transaction.

Conclusion

Bitcoins are rapidly becoming a global currency accepted in various countries around the world. It has made monetary transaction easier and still has more prospects in the future.

Crypto, Financial Technology, Fintech

Financial Technology: The Future of Cryptocurrency

Leave a comment

With the advent of cryptocurrencies such as Bitcoin, Ethereum, Litecoin, cryptocurrency is gradually becoming “the new cash”. Many transactions are now being made easy, hassle-free, and cost-effective. As they gradually penetrate the global economic system many are concerned about its future.

What is Cryptocurrency?

Cryptocurrency is a digital (virtual) currency that is encrypted through a complex method called cryptography, which serves as its security. Hence it is difficult for it to be duplicated or counterfeited. Cryptocurrencies are not regulated by financial authorities such as The Central Bank. It is rather a decentralized monetary system, whose control and regulation is effected through blockchain technology.

Due to its decentralized system, cryptocurrencies are immune to the influences and manipulation of government (they cannot control its circulation and production). Bitcoin emerged as the first known blockchain cryptocurrency, gaining fame globally. With time, however, others emerged some of which are Ethereum (ETH), Dash (DASH), Z-cash (ZEC), Litecoin (LTC) among others.

Cryptocurrency History

Although cryptocurrencies such as Bitcoins appeared recently, the idea of cryptocurrencies very certainly not a recent one. Various cryptocurrencies such as Electronic Cash and B- money were developed, but they had a major obstacle which impeded their progress, this is singular issue was; how to avoid the double-spending problem i.e. the using of a cryptocurrency twice. There was a need to prevent it from being duplicated and counterfeited.

In the early 2000’s, however, the first breakthrough seemed to have occurred with regards to this problem, because the first popular decentralized currency surfaced. The breakthrough came by way of the very popular Bitcoin, in precisely the year 2009, packing features which resolved the prior issues former cryptocurrencies faced. Bitcoin has a very secure system known as the blockchain technology which prevents it from being duplicated or used twice. The emergence of other cryptocurrencies hereafter followed one of which is the Litecoin(LTC) which was released in the year 2011.

What Does the Future Hold for Cryptocurrencies?

The decentralized and encrypted nature of cryptocurrency has made a rapidly growing and very recognized means of payment globally. However, one basic feature of the cryptocurrency, its finite supply, has caused a growing concern among many about its future. Many express optimism about its future prospects while others are pessimistic about it. Many counties such as the United States, the United Kingdom, and Australian have accepted the use of the cryptocurrency, many are hopeful to the possibility of the currency gaining acceptance and usage in more countries of the world.

Popular Optimistic Predictions

A number of predictions have been made with regards to the future of the cryptocurrency some gaining popularity.

Lori Beer, J.P. Morgan Chase CIO 

Blockchain will replace the existing technology.

Kim Dotcom – Advises his fans to buy cryptocurrency:

Dollars are gradually becoming worthless.

Jeff Sprecher, CEO of NYSE (world’s largest stock exchange):

Cryptocurrency is the first worldwide currency.  

Pessimistic Statements

Other than the positive prospects cryptocurrency has for the future, people are still skeptical about it. A notable expression of pessimism was relayed through the person of Vitalik Buterin, the creator of Ethereum (the world’s second-largest cryptocurrency):

The Blockchain industry is about to hit the ceiling, there is no room for growth.

The Future of Cryptocurrency Looks Bright

Global Usage:

The traditional means of payment, i.e. paper currency, though still largely used by people all over the world, there is a prevalent belief that people will switch over to the cryptocurrency in the future, especially businesses, because with this they can evade middlemen costs from various businesses. This, in turn, will make services cheaper for end users. All these they believe will happen whether people are aware of it or not.

Government Agencies:

In the future, with the availability and security of the blockchain, the government will adopt cryptocurrencies for the management of their states, because, in the future, cryptocurrency will manage the cash flow in the country.

Exchange Trading:

More currencies are emerging and in the future more will still come and their prices will rise. Many would start trading in different cryptocurrencies.

When the prices of other cryptocurrencies like Ripple, Ethereum, Litecoin, and Stellar rise, they will have massive influence in cryptocurrency exchange and crypto world.

Financial Industry / Banking:

Since the cryptocurrency is rapidly growing and making business transactions, banking and other financial industries may experience hindrances in their operations, hence to avoid this, bank will have to accept cryptocurrencies to stay relevant and when this happens, cryptocurrency currency bank accounts will be available and people can open them instead of computer wallets.

Cryptocurrencies would gain wide usage such that debit cards would be made available to facilitate transactions. Generally, this optimistic believe that in the future, cryptocurrency will replace fiat currency and the world evolve to a point of cashless transactions.

What’s Happening Now?

Though many predictions have been made some engendering hope and others while professing the arrival of subsequent doomsday, we have to observe the happening around us with regards to the cryptocurrencies.

Many industries are presently adopting and promoting the usage of cryptocurrencies, some of which are:

  • IBM, Barclay, CLS partnered to form ledger connect to launch blockchain apps for usage in banks.
  • Iran announced to make crypto mining industry.
  • Cyclean, a blockchain company based in Singapore, is launching blockchain-enabled electric vehicles that will mine crypto as people travel.
  • New York medical school founded and launched a research center focused on how to apply blockchain in healthcare.
  • Kaliningrad, Russia, now offers cryptocurrency as a means of hostel room payment.
  • Major Cineplex, a big movie theatre in Thailand, is integrating payment in crypto, to allow customers to pay with cryptocurrencies.

Conclusion

Although pessimists have given their takes, we can see from the predictions and cases that cryptocurrencies definitely have a bright future ahead of it. With the rapid and constant growth of the blockchain industry (the engine of the cryptocurrency), trends suggest that cryptocurrency will be the new money of the future. That future is gradually coming to play as more and more people and businesses are now subscribing to cryptocurrency for their everyday transactions.