Few technologies have generated so much dramatic online discourse and puzzled
most of the populace as Bitcoin. In fact, this digital currency has both piqued strong
interest and caused a quagmire of worldwide confusion at the same time since its
introduction in 2009 on an email as an online money liberation mechanism.
Now Bitcoin is intriguing more people than ever before, causing its value to soar to all-time highs and to make
millionaires out of folks who stashed away gargantuan amounts of in its early years.
What explains this? Is Bitcoin currency's future? Can we call it actual currency? What is its purpose? And is it
a good investment? Answers below.
What is Bitcoin?
Bitcoin is a global cryptocurrency and digital payment system that employs decentralized technology to
process transactions and store money without needing banks or names of payers or payees.
How does it work?
Bitcoin operates on a block chain, a public ledger that keeps a decentralized record of all Bitcoin transactions.
All network users hold and update the block chain as they continue to make Bitcoin transactions. They create
Bitcoins by cryptographically generating blocks on their network through their computer power. When each
created block is added onto the block chain, users make money from it by maintaining the network and their
place in it.
The system limits the number of Bitcoins each user can create to just below 21 million, to avoid diluting each
Bitcoin's value. A total of 14 million Bitcoins now circulates. Each has a value of more than $4,000 as of this
What affects a Bitcoin's price?
A Bitcoin's price has fluctuated since reaching its critical mass with the mainstream four years ago. At that
time, prices skyrocketed nearly 10,000% before being pushed down again by the fall-through of Mt. Gox,
Bitcoin's largest exchange. Today, CoinDesk is Bitcoin's likely leader. Tomorrow's new Bitcoin boss is anybody's
Following their plunge, prices began to inch up before soaring once more, mainly because regulators have
gotten in on the Bitcoin act, and initial coin offerings have risen as a means of raising funds by vending Bitcoinlike
cryptographic currency. Many cynics anticipate a new Bitcoin bubble about to burst, while supporters
claim that Bitcoin's rebound is just beginning.
Who is Satoshi Nakamoto?
"Satoshi Nakamoto" is the pseudonym of the unidentified originator(s) of Bitcoin and block chain. The true
identity of Bitcoin's founding father(s) remains unknown in spite of endless journalistic efforts to track it down.
In 2014, Newsweek declared Japanese-American man Dorian Nakamoto, 64, to be the founder, but scrutiny
invalidated that finding, a car-chase ensued, and the suspect outright denied the magazine's claim.
Within the last two years, former Australian professor Craig Wright reported to the BBC, The Economist
and Wired that he was Bitcoin's creator, a claim he reiterated in blog posts. Failing to prove it, he publicly
apologized: "I believed that I could put the years of anonymity and hiding behind me. But, as the events of
this week unfolded and I prepared to publish the proof of access to the earliest keys, I broke. I do not have the
courage. I cannot."
So the individual or collective mastermind behind Bitcoin and block chain remains a mystery to this day.
How many people use Bitcoin?
According to research from the University of Cambridge, England, up to 5.8 million users possess cryptocurrency
accounts, most of which use Bitcoin.
What is Bitcoin used for?
Bitcoin has many purposes, most commonly company-funding, cash investment, and fee-free money transfers.
However, Bitcoin is also used in cybercrime, drug-dealing, money laundering and other felonies, since a Bitcoin
wallet is nearly impossible to associate with any one person.
Bitcoin can be expended both online and at designated retailers: CEX stores, Dell's website, Your Sushi
restaurants, and select pubs. A complete list of Bitcoin-accepting online and offline enterprises can be seen
at many websites around the net. Users can also withdraw Bitcoin at special ATMs, which are listed on-line.
Others simply keep their Bitcoins for investment purposes. Given its extreme volatility, Bitcoin is yielding high
gains from its early investors (see below).
Is Bitcoin a good investment?
Independent, decentralized setups protect Bitcoin against theft, fraud, and transaction charges. Bitcoin has
also yielded sizable returns for some of its investors: its price increased from a few dollars in early 2013 to
$1,100 by the following November. This has made millionaires out of those who had invested $2,500 in Bitcoin
The Bitcoin more than doubled to $2,400 at one time this year, but its price-plunge by $400 last May left many
investors high and dry. So Goldman Sachs needn't be so cocksure about the $4,800 price target their assigned
analyst recently stuck on the Bitcoin.
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