If Bitcoin is so good, why isn’t everyone using it?
Bitcoin, the Currency of Internet has become the most interesting currency of our decade. Even though Bitcoin is still a newbie in the world market and doesn’t have much authority yet, it has the potential to dominate the digital exchange worldwide.
People like me and you mine the internet gold throughout day and night. And peoples like us control/manage the supply chain which makes it much more transparent than any other currency. There’s no government involved, no boundaries or identities, it’s completely anonymous.
A question that bugs many from stepping on the Bitcoin-hype-train is – “If it’s so good, why everyone isn’t using it?” Well, the question answers itself. Bitcoin is too good to become a widely accepted currency this soon.
The first reason why people avoid it is instability. It started with a value of just a fraction of Dollar in 2008 and in November 2013, Bitcoin hit the highest peak value of $1216.73. Then during the next few years, it kept oscillating between $500 – $800 marks until January 2017 when it reached +$1000 mark again.
Thus, Bitcoin value graph looks like a seismograph placed near an active volcano.
Why Bitcoin does get a bad rep?
Because of the anonymity and decentralized nature, Bitcoin is the favorite currency for illegal businesses. Dark web marketplace like Silk Road played a great role in surging the value of Bitcoins.
Silk Road founder Ross Ulbricht got arrested in October 2013 by FBI. They seized 26K Bitcoin from Silk Road account which valued, at that time, around $3.6 Million. Right after his arrest, Bitcoin value jumped from just ~$140 to $979 in November 2013. It then slowly settled around $400 – $600 in the next few years.
Bitcoin is not illegal in any form. It, however, is considered the safest method of transactions. However, its use in illegal business is what got it a bad rep. FT even interviewed two market professional last year where they shared different opinions on Bitcoin.
Now, the list of businesses who has accepted Bitcoin as a valid method of payment is getting longer and longer. There are now more than 160,000 merchants accepting bitcoin for trading. Companies like WordPress, Dell, Subway, Reddit, Virgin Galactic and Microsoft etc. have already started providing services in exchange of this magic-internet-money.
Fact: The FBI only seized almost only 20% of bitcoins of Silk Road account, 80% of the bitcoins are still out there.
Robust system with a fear of getting hacked
A block records recent transaction details. Each block contains a unique mathematical puzzle. The bitcoin mining is a process to solve these mathematical puzzles. And this difficulty level increases with every 2016 blocks.
To let you know, the difficulty level of finding the next hash – solution to mathematical puzzle – has become too difficult and runs in billion – 300 billion was the recently record difficulty level.
But we still see a large number of cases of organization which run their business through bitcoins getting hacked. There are quite a lot of cases when Bitcoins got stolen from companies’ accounts which resulted to a loss of millions of dollars. In Mt. Gox case, for example, the company suffered $460 million and went bankrupt.
Though blockchain is a tough nut for hackers but it has security flaws. In Mt. Gox case, the theft was a result of internal security breach, for example. Similarly, in many other cases, Bitcoins got stolen due to security flaws at users’ end.
Fact: A journalist from Bloomberg was given a Bitcoin in a live TV show, but it was stolen by a viewer.
Has a Potential to Become World’s Digital Currency
The value of bitcoin touched $1000 in just 4 years. It, at this moment, is fastest appreciating currency. In 2013, China banned Bitcoins which led to its value going below $500.
This year, however, Bitcoin’s soared beyond $1000 mark and is currently sitting at $1066. China has lifted the ban, too. Merchants in India have started using bitcoins.
The United States is considered most bitcoin-friendly country of the world. The United States Treasury classified bitcoin as a convertible decentralized currency in 2013. Canada installed world’s first Bitcoin ATM in 2013.
“There would be nothing to stop people in this country deciding to transact in some other currency in a shop if they wanted to. There’s no law against that, so we do have competing currencies.”Glenn Stevens, Former Governor of Australia
Fact: A guy paid 10,000 Bitcoins for for buying two Pizzas.
Has a great potential: from 1K to 10K in 10 years
The creator of Bitcoins had the demand and supply law of Economics in his mind. He limited the controlled supply of currency to maintain its growth and value.
On average it currently takes 10 minutes to mine a block and after every 210,000 blocks, the supply of bitcoins reduces to half. In Bitcoin’s earlier stages, a block had 50 bitcoins and now, the number has reduced to 12.5 bitcoins.
Also, more than 80% of all the bitcoins have already in the market. In next 123 years, only 20% of the rest of the bitcoins will be mined. The last 21st millionth bitcoin will be mined in 2140.
However, mining is not going to end as long as peoples keep using Bitcoins. There will be transactions so there will be mining. Blocks will still be mined after the issuance of 21st million bitcoin but the difference will be that the next mined block will not have any bitcoin as a reward.
The limited supply and increasing demand are 2 major facts that could influence surges in Bitcoin value. It clearly has the potential to reach a $100K mark, if not before, in next 10 years. Let’s see how things play out.
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