Over the past few weeks, its has become impossible to read the news without mention of the popular digital currency. Though introduced to the world over 7 years ago, bitcoin has resurfaced, as investors and finance professionals are seeing its worth. Since January of this year, the value of bitcoin has been increased by 10 times, an unusual jump in such a short span of time. Leading the news stories over the past month, bitcoin joined the financial mainstream in November, when it became approved for trading. For those unaware of this phenomenon unfolding before our eyes, this blog is the place to start.
Bitcoin in its most simple form, is a type of electronic currency that has no physical presence. Though there are many other cryptocurrencies that exist, bitcoin used a technology that has rarely been seen in an exchange of money. The concept of there being no middle man– like banks– has given users a completely unique way to complete transactions. Created in 2009, by an anonymous online users, bitcoin has come quite a long way in its few years of existence.
One of the most appealing aspects of bitcoin is that buyers have the ability to make purchases anonymously . No need for names, credit card information, or other details, just the simple trading of the currency. Although there were some illegal transactions occurring through this exchange, the exchanges have now become more regulated. Another appeal for many people is the ease of paying others. Like apps such as Venmo and Paypal, bitcoin exchanges can be made right from mobile devices. The most obvious and recent draw to bitcoin is the return that the assets have been providing investors. The supply and demand of bitcoin has done its job by increasing the value and making the prices skyrocket. The trust in government and other financial institutions is removed, leaving all faith within the consumers.
Since bitcoin eliminates the need for banks, the currency is stored in a virtual wallet, through the user’s cloud or computer. The wallet works similarly to a bank, as it allow for the receiving and sending the currency. However, unlike banks, the bitcoin wallet is not insured by the FDIC. There are definitely some drawbacks to this situation, as when servers get hacked, the entire cloud comes along with it. Additionally some bitcoin users have been known to delete their wallets (by accident) on their computer or have had a virus destroy them.
Whether you’re in the market for some new financial endeavors or are curious about the growing phenomenon, stay tuned, because bitcoin is here to stay!