For those of you who’ve heard the buzz but have no idea what it is, Bitcoin is an internationally available, anonymous, electronic form of currency (known as cryptocurrency) that’s unregulated by any one government or institution. It’s traded on Bitcoin exchanges, just like other currencies are traded in stock markets. It’s been around since 2009, but gained a lot of popularity in the last couple of years, resulting in the value of one Bitcoin going almost as high as an ounce of gold, hitting $1,242 in November 2013.
If you look at the historical trading charts for the closing price values of a Bitcoin, you can see that November 2013 was its heyday. At the beginning of that month, a Bitcoin was worth about $200, but then it shot up to its high point of $1,242 before closing the month at a value of almost $1,000. That’s as crazy as it’s ever gotten, though, and the value has gradually decreased since then. As of today, the value of a Bitcoin is close to $370, pretty near what it was before that roller coaster month.
No doubt, the crazy upswing of the Bitcoin’s value that fateful November is what started all the fuss in the first place, but since then, many concerns have surfaced about Bitcoin’s security, as well as the moral issues associated with its anonymity.
How Secure Is The Bitcoin?
Since Bitcoins are a virtual currency, existing only in electronic format, of course there are severe concerns about the ability of hackers to get access to them. In order to own Bitcoins, you have to either purchase them or mine them yourself. If you’re looking to purchase them, you have to go through an exchange (similar to a stock market) and in order to store those Bitcoins, you have to open a “wallet” with an online service provider. Obviously then, your Bitcoins are at the mercy of the wallet holders’ and exchanges’ security standards.
There have been breaches in the past, including the largest upheaval to the Bitcoin market in February 2014 when Mt Gox, the largest Bitcoin exchange at the time, closed down and went bankrupt after misplacing approximately 730,000 Bitcoins, worth millions of dollars. Because of the anonymous nature of the Bitcoin currency, it is neither insured nor recoverable to its owner, once lost.
Is The Bitcoin Moral?
One of the allures of Bitcoin is its anonymity, whereby the currency is not registered to a person, but rather an electronic location. One of the obvious results of this is that Bitcoin is widely used in illegal transactions, including drug purchases and money laundering operations. It’s also the currency of choice for a lot of online gamblers.
This debate on Bitcoin’s morality and legality is ongoing and far-reaching. Governments are getting concerned and in November 2013, the Senate Committee on Homeland Security and Governmental Affairs held a hearing about it to discuss whether or not virtual currencies are being addressed adequately across Government.
Committee Chairman Tom Carper concluded that “It’s clear that this technology presents some new and unique risks, but with it, there are clearly some who believe it has great potential. The federal government and society as a whole need to come together to figure out how to effectively deal with it, and this hearing was the first step. Congress and federal agencies must continue to stay engaged and informed to develop smart, sensible, and effective policies and to properly implement such policies.”
Is It Still Gaining Popularity?
Bitcoin is currently accepted as a valid form of payment at many online stores and even some brick and mortar establishments. Computer giants like Microsoft and Dell got the ball rolling by accepting Bitcoin for digital content like apps and games, but the list of businesses that take it is growing all the time.
You can now use Bitcoin to pay for almost anything including household goods, travel, online gaming, gift cards, or you can even make charitable donations using Bitcoins. You can find comprehensive listings of places to spend your Bitcoins at websites like www.coinmap.org, www.spendbitcoins.com, and www.usebitcoins.info.
Bitcoin Inspired Developments
Of course, like any new and popular idea, it hasn’t taken too long for other crypto-currencies to start emerging. Collectively referred to as Altcoins, Bitcoins are facing competition by others like Litecoin and Dogecoin. In fact, according to Wikipedia, as of January 2015 there are 740 different forms of crypto-currency available for trade in online markets. You can find a listing of the most popular Altcoins online.
As crypto-currency gains popularity in general, it stands to reason that the crypto-currency hacking industry is growing as well. Similarly, as Bitcoin gains popularity, people are trying to find more creative ways to mine them as well. In order to mine Bitcoins, a huge amount of computer space is needed.
Recently BitTorrent faced some criticism when users who were downloading uTorrent software, discovered that a Bitcoin mining software called Epic Scale was being installed at the same time. In the same way that uTorrent “borrows” space and information from other peoples’ computers, Epic Scale “borrows” the use of your computer’s resources in order to mine new Bitcoins for someone else’s benefit. The result can be negative for you, as the stowaway software slows down your computer’s operations and racks up your electricity bill, even potentially damaging your computer by making it run too hot for too long when it’s supposed to be idle.
The Future Of Bitcoin
Despite all these emerging concerns and issues, Bitcoin still remains the most widely used crypto-currency. Considering that the number of exchanges and Bitcoin related services are growing in number each year, and the fact that even some Governments are starting to show interest in it, it doesn’t look like Bitcoin is going anywhere anytime soon. The number of retailers accepting the currency is in the hundreds of thousands and the exchanges are actively being traded.
All in all, investors in Bitcoin face the usual uncertainties and risks associated with a new and untested technology, as well as some unique issues regarding the security and morality of them. As Bitcoin grows, along with the acceptance and moderation of all electronic currencies, we’ll no doubt start to see some stability emerge. For now, Bitcoin seems to have enough momentum to keep it going strong into the immediate future.
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