The United States stock market is taking the wildest ride of its history; real estate and precious metals continue to escalate in value even during widespread unemployment, eviction, foreclosure, and bankruptcy loom. Financial analysts warn that banks may fail, that so-called hyperinflation will destroy the value of the American dollar, which may lose its place as the World Reserve Currency.
Enter Bitcoin, a pioneering cyber currency that has been often-imitated but not yet bettered. But what is Bitcoin, how does it work? What gives it value?
Bitcoin is the brainchild of an unknown person, persons, or group of people known only as Satoshi Nakamoto, who created a finite currency model, the mining of which would be reduced at scheduled times (called halving) until no more bitcoins would be mined. That year is 2140.
Because of the inherently limited amount of available Bitcoin currency, the Bitcoin cannot succumb to the same kind of hyperinflation, which occurs when so many bills of standard currency like the American dollar are printed that the currency’s value becomes practically worthless.
This structure makes Bitcoin a currency not tied to a bank or other regulatory institution, or any particular government. It can’t be manipulated the way other world currencies can. As a digital currency, it can be easily handled digitally and is poised to be the first great world currency, followed by Ethereum, Chainlink, Litecoin, and myriad others. The list is getting longer every day.
These digital transactions are charted using a new digital formatting system called blockchain technology. It records the transactions in a digital ledger, each in its box, which is then chained together. Mastering blockchain tech is one of the Holy Grails of current tech companies.
We use term mining, which is confusing for some. Bitcoin is most popularly known as a digital currency and used for trading online, though mostly they’re purchased and held by investors. The days of buying things for bitcoins instead of dollars are coming, but only a few merchants like Coca-Cola (in over 2,000 vending machines) are doing it now.
You can also buy Bitcoin in a physical form. The Casascius Bitcoins, as they’re called, were created by Mike Caldwell, consist of mined brass with gold electroplating and come in denominations of 25 Bitcoins. Bitcoin considers them souvenirs, as the digital record is the actual value of the currency.
This fact, unfortunately, can make it challenging for many investors to access their holdings due to extra cybersecurity around such sites, and it could make Bitcoin holdings vulnerable to hackers who are experts in such things.
As the use of Bitcoin grows, Bitcoin ATMs are becoming popular, allowing users by using a phone app to buy directly from their bank accounts. They’re increasingly common in malls (which are not themselves increasingly common). But watch out, as these ATMs charge a 20% markup fee, plus a $3 flat fee for transactions less than $350.
And the use of Bitcoin is most certainly growing; there’s no doubt. In 2009, monthly Bitcoin transactions were up to $6,000 or so. In 2020, that monthly number is $10m (ten million). Back then, the coins were worth a few bucks each. Now they’re worth about $11,000.
No wonder investors are buzzing. So if you’re not sure about entering the Bitcoin era, check out https://learnbonds.com/bitcoin-era and make sure you give it some serious thought and research.