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What is Bitcoin?

Posted by Fran Geddes on 05-Dec-2017 10:19:02
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Bitcoin is one of the hottest topics in technology, finance and general news channels, right now. The current value of the currency has attracted users across the globe, hoping to make thousands, even millions, by investing at just the right time.


Bitcoin Cyrptocurrency


Over the past year, the value of Bitcoin has skyrocketed to an all-time high. At the time of publish, 1 Bitcoin is equal to £8429.21, but it wasn’t always this way. In its humble beginnings, Bitcoin was barely known and worth very little. Back in May 2010, at what some enthusiast deemed the first real-world Bitcoin transaction, two pizzas were purchased for 10,000 bitcoins, that’s over £80,000 at today’s value. This demonstrates Bitcoins ability to drastically increase its value is impressive, but if it can rise at this rate, it can also fall.


Bitcoin’s value seems to run parallel with outside interest. As the Bitcoin community grows, so does the value, meaning the current buzz surrounding the cryptocurrency is fuelling the increase. But, investing in Bitcoin is risky. The currency is notorious for its fluctuating value. Increasing dramatically one day, dropping the next – even as much as 80%! So, like many investments, the risk is ever-present.


How does it work?

Bitcoin mining

Created by software developer, Satoshi Nakamoto, Bitcoin is a form of digital currency, created and stored electronically. What attracts most users to the currency is its decentralised state, meaning no one controls it. Bitcoins aren’t printed or traded hand-to-hand, and no single institution controls the network.

Regular rules of financial transactions don’t apply to the cryptocurrency. Bitcoin protocol means that only 21 million bitcoins currently exist, therefore, as popularity and demand increases – so does the value.


Another attraction to Bitcoin is its ambiguity. Users can hold multiple Bitcoin addresses, known as wallets, without linking the wallet to a name or any other identifying information. The way the transaction is processed is using a software platform called Blockchain.


The complex system of Blockchain can prove difficult to understand, but it drills down to being a method a recording data. Blockchain can independently record and verify transactions. Blockchain encrypts each individual transaction across different computers, verifying the transaction by agreeing on a particular answer to assign a unique signature. Once processed, the transaction cannot be altered, only added to, and this will trigger a notification to all relevant systems.


Its anonymity means Bitcoin has a bit of a bad reputation for being associated with dodgy internet dealings and the dark web, which has put many people off investing. By no means is this incorrect. Bitcoins unique format has enabled illegal transactions to take place with a minimum chance of any of the party members being traced or identified. But, it is not only used for illegal activity. The anonymous accounts also mean transferring money to accounts can prove complex and risky. Some users have been known to send money to the incorrect accounts by using the wrong address or mistyped details and once this money has gone, it’s gone for good.


Bitcoin Value


Bitcoin can be traded electronically across the globe. It doesn’t charge international fees, it is not the victim of inflation or controlled by the bank and it is a very safe and secure way of trading. Blockchain can be used to make a purchase from many online e-commerce sites with sites like these directing users to merchants who will accept the digital currency. As the public familiarise themselves with cryptocurrencies, it is likely acceptance will become more wide-spread.


Fintech innovators, Revolut, have recently announced its intention to allow users to use cryptocurrencies, including Bitcoin, within their accounts. Users will be able to convert and store their digital currency directly in their accounts. Since it’s announcement, the Fintech company has signed up over a million new users to its services, demonstrating the widespread epidemic Bitcoin has caused. If more financial services follow suit, who knows what it could do to the value.


But, don’t be blinded by the dazzling benefits. As previously mentioned, investing in Bitcoin is certainly not risk-free. The current value of Bitcoin means people are fumbling over each other to invest, but if the currency crashes, there is no guarantee it will recover. Think carefully before making investments and keep yourself informed of the market value to be sure you want to invest.


Bitcoin demonstrates the blurred lines between the physical and digital world. It is important brands and businesses monitor the popularity surrounding the cryptocurrency to stay ahead of technology trends. Whilst Bitcoin may not be something your business will utilise, the increasing value demonstrates how quickly digital trends can take over.


To understand what the current technology trends can do for your business, get in touch with B60 today! We offer consultancy, development and support to businesses looking to embrace the opportunities presented by technology. 


Get in touch with B60


Topics: Disruption and Change, Finance