Long before the creation of the dollar bill, people exchanged cattle for goods and services. It was the earliest form of money, a concept that has since blossomed into plastic cards and digital payments. Nearly a decade after the turn of the 21st century, a new form of currency entered the market, hoping to live outside the regulations of national governments and local banks. Though the concept of cryptocurrency, or digital currency, has existed since 1998, the most successful version, Bitcoin, was still quite a few years off. Â
Bitcoin started as a simple, open-source software in 2009, developed by either a group or a single individual working under the name Satoshi Nakamoto. Though the mysterious Nakamoto ceased the development of Bitcoin and moved on to a different unknown project, his or their creation continued to thrive. Bitcoin currently exists as a digital currency that isn’t valued or regulated via a centralized bank. It does, however, share similar properties to the common dollar bill, though it’s not a widely accepted currency..Â
Like the USD, Bitcoin can be exchanged for goods and services through companies like Microsoft, Wikipedia, Overstock.com, and Twitch. There have even been reports of food outlets like Pizza Hut, Subway, and Burger King accepting Bitcoin, though those are typically specific to a region. To exchange Bitcoin, users engage with a centralized network, known as a blockchain. It’s important to note that a blockchain is a centralized network, not a bank. It doesn’t regulate. It simply is the tool that allows cryptocurrency to exist and be exchanged in a peer-to-peer format.Â
One of the biggest pitfalls of Bitcoin is that, much like the stock market, its value fluctuates frequently. Though the price of Bitcoin is determined in much the same way money is, through a system of supply and demand, since the supply of Bitcoin is relatively low and the market is small, it doesn’t take much to cause a drastic change. For instance, on January 19, 2021, the value of Bitcoin rose from $36,297.40 at 6:00 AM to $37,591.80 at 4:30 PM. Then, within 24 hours, it was valued at $34,198.50.
In its current form, Bitcoin is still too volatile to become a common form of currency. At best, it is an investment opportunity that comes with a high risk/reward ratio within a market that can change drastically within hours. If you are interested in Bitcon, feel free to subscribe to our newsletter below
