What is Bitcoin? Complete Explanation About Bitcoin – In early 2017, on January 4 2017 Bitcoin rose to an all-time high of $ 1129.87. Bitcoin continues to increase in large numbers. Whereas one year earlier, Bitcoin was only at the level of $ 434, imagine.
Basic Understanding of Bitcoin
Bitcoin is a form of digital “currency”. It is created and stored electronically on a computer. Bitcoin is not paper money like dollars, euros or rupiah by central banks or monetary authorities. Bitcoin is the first example of a cryptocurrency, which was produced by people and businesses around the world using advanced computer software that solves math problems.
Satoshi Nakamoto first proposed Bitcoin as a payment tool based on mathematics, although it is still unclear who Satoshi Nakamoto really is and no one has yet managed to reveal who the person who invented the bitcoin was.
Bitcoin is a method of payment or transfer of value that is independent of governmental authorities such as central banks which have traditionally controlled the money supply and availability of currency on global markets. In many ways, Bitcoin is a global tool of exchange. Transfers are made via computer and processed very quickly with low transaction fees. Bitcoin is not processed through the traditional banking system, but flows from one computer wallet to another (the term wallet is referred to as a Bitcoin Wallet).
Bitcoin cannot be stored or put in a real pocket or wallet like most currencies; it’s purely a computer-based exchange tool, just a digital currency consisting of intangible numbers.
Bitcoin is a fixed asset, meaning that there are only 21 million coins in total worldwide. Solving advanced math problems resulted in Bitcoin mining. However, Bitcoin is divisible so the growth potential for the medium of exchange is limitless. One of the most interesting inventions that came with Bitcoin is blockchain or Distributed Ledger Technology (DLT). DLT has tremendous potential when it comes to traditional operations and settlement consequences for businesses in the financial industry as well as others.
DLT tracks ownership and enables immediate and efficient Bitcoin transfers.
Bitcoin has several attributes that distinguish it from traditional currencies as a global tool of exchange. The central bank or monetary authority do not control the amount of Bitcoin nor do they control every aspect of bitcoin; it is decentralized making it global. Anyone with a computer can set up a Bitcoin address to receive or transfer Bitcoins in seconds. Bitcoin is anonymous; cryptocurrency allows users to maintain multiple addresses and set addresses without the need for personal information. DLT technology makes Bitcoin completely transparent; it stores full details with the address of every transaction that has ever occurred in the ledger or the so-called blockchain.
Bitcoin transfers are immediate and once made, everything is final. At the same time, there are only limited fees and international and domestic transfer fees are not subject to foreign currency exchange rates. There are no restrictions when it comes to Bitcoin.
Is Bitcoin a Currency?
There is a lot of debate about whether Bitcoin is a currency. The Merriam-Webster dictionary defines currency as:
- Circulation as a medium of exchange
- General use, acceptance, or prevalence
- The quality or state of being present
- Something (such as coins and banknotes) that is circulating as a medium of exchange
- A tool used for bartering
- Media of verbal or intellectual expression
The official definition of currency can leave you even more confused about whether Bitcoin is a currency or something else. After all, it certainly fulfills some of the characteristics in the definition, but not others.
In September 2015, the Commodity Futures Trading Commission (CFTC) in the United States officially designated Bitcoin as a commodity.
Is Bitcoin a Commodity?
The designation of the CFTC came in response to a Bitcoin exchange offering derivative contracts or options at cryptocurrency rates. However, Bitcoin is one of those assets that does not fit into the historical definition and understanding of what a currency is and what commodity explains the argument.
Throughout history, many commodities and even some manufactured products served as currency. Perhaps the best examples are gold and silver. Gold and silver were not only used as a medium of exchange, or currency for thousands of years, they supported many paper currencies around the world until very recently. Central banks and monetary authorities around the world continue to hold large gold reserves and categorize their holdings as “foreign reserves.” Therefore, both gold and silver can be considered in the same class as Bitcoin. However, as we know that the value of gold tends to go up but slowly while bitcoin can go up many times fast and also fall very quickly.
Moreover, during history salt served as a medium of exchange in ancient times. Recently, cigarettes or blue jeans have been used as currency in certain regions of the world for the last few decades. As you can see, the classification of Bitcoin as a commodity is dubious and difficult to understand. Bitcoin currency is difficult to categorize because it is very new and different from other assets available to market participants. One thing seems certain, the growth of interest in cryptocurrencies over the last few years has been very high and that means that bitcoin is an asset that deserves our attention.
The future for Bitcoin
Technology has made the world a smaller place over the last few years. Bitcoin is the child of the technological revolution. As a global currency (or commodity) that can be used by people around the world as a medium of exchange without involving the government, cryptocurrency will continue to attract the interest of many people and will also face a lot of resistance from the government. This is because a lot of Bitcoin is used as a means of exchange for illegal transactions, for example drug and weapon transactions, where all these transactions are not controlled or monitored by the government.
In countries where the flow of currency is subject to strict government control, Bitcoin offers a method for transferring money to areas around the world where restrictions are less severe. In addition, because Bitcoin transactions are anonymous, cryptocurrencies will continue to attract transactions linked to malicious and illicit activity as I explained above.
It is clear that Bitcoin is starting to attract and be used all over the world. In 2016, the majority of Bitcoin transactions took place in China. In fact, the massive volatility in Bitcoin’s value in early 2017 that took the price from $ 1129 to under $ 800 on the same day was likely due to speculation from China. Bitcoin, and its subsidiary, blockchain technology, has a future on the world market. However, it is possible that governments around the world will reject global assets that operate outside their reach and could facilitate activities that go against their laws and regulations or their political agendas.
So, you can take advantage of moments like this for investment purposes because the value of bitcoin can soar very high and also freefall or can avoid playing with bitcoin until bitcoin is completely clear and legalized by the government because at any time your money can be lost without being there. responsibility at all.
And that’s a basic guide about Bitcoin or digital currency (Cryptocurrency) that I can share with you, hopefully useful and greetings of success 🙂