Bitcoin: Money becomes digitized


A cryptocurrency is a digital currency for online exchanges. Bitcoin is currently the most recognized and valuable cryptocurrency. 

It was developed by an identity known by the pseudonym “Satoshi Nakamoto” in 2009, when the public lost trust in financial institutions with their money after the financial crash and was searching for alternative financial transactional mediums. Ever since, thousands of other cryptocurrencies have been developed. 

Cryptocurrency is decentralized, as all users in the currency network are collectively responsible for ensuring its validity. It is not issued or regulated by the government or a financial institution, such as a bank. 

The supply of bitcoins is limited to 21 million, in order to maintain its value and prevent inflation and fraud. Almost 19 million have been mined so far. 

All transactions are organized by “blockchains,” which store records of the Bitcoin transactions verified by Bitcoin miners. Miners compete to add their “block,” a set of transaction data, to the blockchain that consists of blocks previously added. They must solve a complex mathematical problem to win the race for new Bitcoin. Bitcoin mining allows new Bitcoin to circulate and ensures the legitimacy of all transactions, as records are kept track by many people worldwide. 

Bitcoin is resistant to inflation and can substantially facilitate financial exchange — without the need of an intermediary, funds can be transferred without costly processing fees. Privacy is also a major benefit of Bitcoin because there is no authority that stores one’s personal information or funds.

However, the Bitcoin market is highly volatile due to the absence of a central authority to defend the coin’s value. Its price can fluctuate dramatically on a daily basis, disqualifying it as a universal medium of payment used by consumers and businesses. 

The endorsement of Bitcoin by industry leaders like Elon Musk continues to attract investors and the public’s attention. However, many economists predict that the Bitcoin revolution is a dangerous bubble soon to burst, similar to the dot-com bubble in the late 1990s. 

The future of cryptocurrency like Bitcoin is still in question. While believers imagine a financial utopia achieved by digital currencies, critics dismiss them as immoderately speculative investments. But as our world becomes digitized at a rapid pace, it is also becoming increasingly difficult to imagine a future without cryptocurrencies.