Bitcoin is a cryptocurrency and a digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009.
The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. Since the system works without a central repository or single administrator, bitcoin is called the first decentralized digital currency.
Now, bitcoin is a little confusing as people have varying notions of what it is. The most common understanding of bitcoin is as a currency; a digital unit of value that people use to exchange goods and services whose prices shift wildly all dependent on the government-issued currencies.
Bitcoin is the system’s protocol which describes, in software terminology- as a set of programming instructions that allows computers to communicate. It a chain of communication among a network of computers owned by people around the world who maintain its monetary system and blockchain ledger. This provides a set of operating information and instructions for the computers to verify and keep track of transactions among those operating within the bitcoin ecosystem.
To enable you to send digital money to each other is by the system employing encryption which allows you, as the user, to specify key passwords that are not shared by institutions or other people. The validity of the transaction is performed by the computer with steps run to reach a consensus; which once reached, the payee will know the payer has sufficient funds and not counterfeit digital money has been sent.
An exciting aspect of Bitcoin is that it is an open-source protocol with the ability for money exchange and to create new tools for doing commerce. It is a feature loved by many techies, economists, and futurists. Bitcoin can be viewed as an operating system, though not one computer receiving a set of instructions on how to run itself, but a network of computers that receive the instructions. The core feature is a decentralized and automatic proof generated database containing every transaction ever completed; it is made available to everyone in real time and cannot be tampered with.
Bitcoin has taken the look of a religious movement; meet ups resemble book club meetings with cult-like crowds singing bitcoin praises on social sites such as Twitter and Reddit. The so-called “movement evangelists” are the likes of Nicolas Cary, Andrews Antonopoulos, Roger Ver, Kathleen Breitman among others. Satoshi Nakamoto is the godhead, as he is the one who nurtures and inspires the faithful.
In a way, cryptocurrency could fade away entirely, like Betamax did or like Segway did, with little real-world application. According to Gavin Anderson, who is the lead developer of bitcoins’ core software engineer states, “I emphasize that Bitcoin is still an experiment every time I give a talk; I cringe every time someone invests their life savings.” Those convinced in their doubt like JP Morgan Chase’s chieftain, Jamie Dimon refers to bitcoin as “a terrible store of value” and Warren Buffet calling it a “mirage.
This reaction is usually expected as most people usually have a skeptical reaction at the beginning which later dies down for some but not for all. People are expected to go through a ‘Kuber-Ross’ recognition of cryptocurrency which has the following stages;
Stage One: Disdain. This simply means that this kind of currency possess no characteristic of real money in the sense that this kind of money is not issued by the government and neither is it made from special metal i.e., coins
Stage Two: Benefit of the doubt. Here you hear about the many ways that people will be making money from, but still, something seems not to add up. The means that you are supposed to make money with is still mysterious and unclear. This is where things like ‘the pyramid scheme’ cross your mind
Stage Three: Curiosity. As one continues to read about this, some of the things become clear, and it becomes a bit puzzling because guys like Marc Andresseen who are usually skeptics and mostly right about all things start to be excited about this stuff. But you still wonder how it will be beneficial to the normal citizen and tax payer.
Stage Four: Crystallisation. This can be described as ‘the million dollar moment’ or ‘the light bulb moment’ where once this idea sinks into your mind, you suddenly get the idea that there is a new way of making money that is as easy as clicking away and earning, totally sweat less and effortless.
Stage Five: Acceptance. No matter which way you want to view it, you just have to accept the fact that there is a new way of making money. A million types of cryptocurrencies exist and are here to stay. There now exists a new way of doing business that is easier and quicker and guarantees more security than before. This is one way of doing business that once you are exposed to it, there is no looking back.
Certainly, there are reasons that exist that highly doubt this bitcoin success. Though the scandals that are created of a security breach, seem not to as big as those ones that financial institutions face. They still tamper with the image and the personal relations bit of this digitalized business. There are such circumstances where there is a kind of concern raised that such cryptocurrencies may be used to fund terrorist activities. Such circumstances could lead to the downfall of such cryptocurrencies while they are still in their early stages.
Officials in Brussels, New York, Beijing and London have brought to enforcement of the first set of rules for all users of digital currencies. People all over the digital and physical worlds would feel much safer and comfortable with reinforced cryptocurrencies being protected from dangerous and sinister elements when well formulated. However, the lobbyists may crush the progress and enactment of the bright innovative startup’s ability to create new and potentially better cryptocurrencies to empower individuals and clear out of all the political, environmental, social and financial dregs.
Evolution is ominous, and there may be room for better technologies to provide competition. Using China as an example, the population cannot use this as a form of unilateral payment as they have new and advanced smartphone applications that allow payments without the sometimes negative flexible fluidity of bitcoin. The legal systems that are in the making will improve the cost implied, services offered and regulation to nullify competition against bitcoin.
The most random entity in all of this is people. Cryptocurrencies’ quick rise to popularity has a bit of fun history to it; during the rough financial crisis of 2008, bitcoin offered an alternative to the looming problem- paper money and the banking system. Within a short time, culture surrounded the evolution of currency and embraced it naturally. It is safe and wise to say that without that crisis, the birth of Bitcoin would have been delayed a couple years.