BitcoinNameInstitutionDateIntroduction Bitcoin is a term that is gaining huge popularity in themedia agencies and economic forums. However, a majority of people do notunderstand what Bitcoin is and why its discussions are gaining momentum.
Bitcoin is a form of a decentralized digital currency which provides acombination of peer-to-peer networking, online transactions, digital encryptionand cryptography (Albuquerque and Callado, 2015). the currency can be used as adepository of digital money, an instant personal loan or for transaction purposes.Bitcoin services are free of service charges.The transaction process in Bitcoin is called mining.
Throughthis process, the current Bitcoin ledger records are added to the pasttransaction records. The current Bitcoin transaction records are called blockswhile the past transactions are known as the block chains. When several”miners” across the world provide Bitcoin mining services, they are given anincentive in exchange. This incentive improves their morale of continuingperforming transactions using the Bitcoin technology. The Bitcoin miners arehighly specialized and use high-performance equipment when conducting themining processes. Mining “pools” are used often to increase the efficient useof the resources. Mining pools are blocks formed by several groups of miners(Laszka, Johnson, and Grossklags, 2015).
Although the mining is done in blocks,each miner is rewarded depending on the proportion of contribution he puts in.Each block receives a maximum of 50 bitcoins from the network. This numberdecreases with the usage of the software over time. The software is designed ina way that the total number of bitcoins that exist in the world is not morethan 21 million. This is in contrast to the traditional money. The traditionalmoney is prone to overprinting which makes it unlimited.Bitcoin is the latest concept of money. Money concept beganwith batter before progressing to metal money.
The use of metal coins continuesto be used even today although other forms of currency such as paper money and plasticmoney are the widely used. Plastic moneyis presented in form of ATM cards, credit cards and so on. Computers and theinternet have taken the concept of money to another dimension. Today, people can conduct transactions onlineand also through mobile banking. The concept of Bitcoin was first proposed in1998 by Wei Dan. Wei Dan wanted a formation of a cryptocurrency which would actas an alternative to the centralized and govern-backed traditional money. Ittook almost 11 years before his concept was officially implemented. However,since the first official implementation was carried out, Bitcoin has beendrawing the attention of practitioners, economists, academicians and the media.
As of 2012, there were about 167 currencies in the worldwhich resulted due to the fact that majority of the countries in the world hadtheir own currencies. The emergence of a global currency divided the societyinto three: those who are supporting Bitcoin, those against it and those whoknow nothing about it (Gao, Clark and Lindqvist, 2015). Those who aresupporting Bitcoin have associated several benefits which with such a financialmodel. One of these advantages includes the reduction in the costs which areassociated with international transactions.
A common citizen does not have topay heavy taxes when sending or receiving money from a different country. Thesaid advantage does not benefit citizens alone but also multinationalcorporations. Other benefits of using bitcoin are that the currency isnon-inflationary, the transactions are faster and payment information cannot bestolen since no intermediary involved.The reasons that hamper the global spread of Bitcoin aremainly social or political in nature (Dodd, 2014). Those who are againstBitcoin argue that governments and citizens attach pride and sentiment to whatrepresents their country. Some of these symbols include national anthem, flag,constitutional documents and even the currency used by the country.
It is considered a national loss when acountry loses such symbols. Majority of those who have heard about Bitcoin butdo not know anything about its operations do not accept its use too. The maindissatisfaction with the currency originates from money laundry that occurs inthe black market (Mikeladze, 2017). Initially, bitcoins were used by peopleoperating in the black market and in money laundering businesses. These peopledid not want to get their payment secured nor did they want to reveal theirpersonal information.ConclusionThere are possibilities that the traditional currency willbe replaced by Bitcoin in the near future. However, for it to be accepted andrecognized as the world currency, it must evolve into a more secure form ofcurrency. This can be achieved if the mindsets of citizens and governments arechanged and made to realize the benefits of a single currency.
Those who knownothing about Bitcoin should also be educated about it and its benefits. ForBitcoin to grow from its volatile stage, it has to liaise with governments ininsurance of theft protection policies and also with other forms of onlinepayments. The risks of theft can be minimized by protecting Bitcoin in ananalogous way where depositors are protected by the banks through FederalDeposit Insurance Committee (FDIC).ReferencesAlbuquerque, B. S. D., &Callado, M. D.
C. (2015). Understanding Bitcoins: facts and questions. RevistaBrasileira de Economia, 69(1), 3-16.Dodd, N. (2014). The politics andsocial life of Bitcoin underline the significance of the new currency. BritishPolitics and Policy at LSE.
Gao, X., Clark, G. D., & Lindqvist,J.
(2015). Of two minds, multiple addresses, and one history: Characterizingopinions, knowledge, and perceptions of Bitcoin across groups.Laszka, A.
, Johnson, B., &Grossklags, J. (2015, January).
When bitcoin mining pools run dry. In InternationalConference on Financial Cryptography and Data Security (pp. 63-77).Springer, Berlin, Heidelberg.Mikeladze, A. (2017). Bitcoinswithin Georgia’s Money Laundering Scheme. European Journal of Economics andBusiness Studies, 9(1), 9-16.