Bitcoin

By Sofia Arts Romero and Manon Goirand

Bitcoin is a virtual currency, often described as cryptocurrency, created in 2009 by an unknown person, or persons, going by the name Satoshi Nakamoto. By using Bitcoin, you are able to exchange money and transact in a different way than usual. For this reason, for those who seek to use Bitcoin, it is important to have some information about it beforehand.

To start off, what is Bitcoin? It is known as a digital money system currency worldwide which enables people to transact money virtually to anyone, even people they don’t know since this money exchange is not linked to a person’s identity. In more complicated terms, Bitcoin is a computer file which is stored in what is known as a ‘digital wallet’ app on a device, just like the traditional wallet, but online, making it an innovative payment network. You can make use of Bitcoin by buying products and services, however, it is not accepted everywhere, and some countries have even banned Bitcoin altogether. It uses peer-to-peer technology where no central authorities or banks take part. In fact, it is open-source, where the design is public, having no one owning or controlling Bitcoin. Even though transactions are not linked to a particular identity, they are publicly recorded in a list called blockchain, which makes it possible to track the history of Bitcoins to stop people from spending coins they do not own, making copies or undoing transactions. You can start off by buying bitcoins with real money (from your actual bank account), selling things and letting people pay with Bitcoins, or they can be created by using a computer - usually through a process called ‘mining’ where people set up powerful computers that work out incredibly difficult sums just to try and get Bitcoins, although this process is making it harder and harder to generate Bitcoins and can take years before you generate a single Bitcoin.

The value of a Bitcoin:
As of now, the value of 1 Bitcoin equals close to 10,000 Euros or 11,000 US Dollars, and the highest price reached for this digital currency was close to 20,000 Dollars in 2018. However, similar to currency, Bitcoin’s worth fluctuates, as it is determined by the supply and demand of the users interested in obtaining Bitcoin. When demand for Bitcoin increases, so does the price, and when the demand falls, the price also falls. Therefore the value of the Bitcoin will not be the same over time, and may be more valuable at times than others, but if this is something you are interested in following, you can check the following website to have a view of the growth of Bitcoin since 2014: https://www.coindesk.com/price/bitcoin.

Why are people interested in using it?
People are attracted to using Bitcoin because it allows them to buy any merchandise anonymously, as well as its ease to be used internationally without being linked to any country nor any regulations. Many find it interesting, for example businesses would likely use them as they imply no credit fees or because it is easy for them to make international transactions in minutes instead of weeks with a bank. People also buy it as an investment hoping its value will rise or to avoid losing money to inflation if they come from a country with a high inflation. A small fraction of the Bitcoin network is indeed used in illegal activities as it allows people to buy or sell anything, leaving next to no trace of their transactions as it’s anonymous, no name or identity check is required. However, some argue that it is not entirely anonymous since it still remains possible to track down a Bitcoin user, however it is a very slow process and most of the time unsuccessful (Popper, 2015).

Is it an entirely certain currency?
To be able to hack a cryptocurrency is extremely hard, since it uses cryptography to secure transactions. Blockchain technology and the constant review of the system has made it especially hard to hack bitcoins (Reiff, 2020). This is, however, not impossible since hackers could potentially steal bitcoins by obtaining access to the owners’ digital wallets, and several users have been hacked in the past.

Reference

Popper, N. 2015. Bitcoin basis. The New York Times. [online] Available at: <https://www.nytimes.com/2015/11/05/business/bitcoin-basics.html?searchResultPosition=5>

Popper, N. 2017. What Is Bitcoin, and How Does It Work?. The New York Times. [online] Available at:<https://www.nytimes.com/2017/10/01/technology/what-is-bitcoin-price.html?searchResultPosition=1>

Reiff, N. (2020, August 28). Can Bitcoin Be Hacked? Retrieved October 19, 2020, from https://www.investopedia.com/articles/investing/032615/can-bitcoin-be-hacked.asp

Some things you need to know. (n.d.). Retrieved October 19, 2020, from https://bitcoin.org/en/you-need-to-know

Guide: What is Bitcoin and how does Bitcoin work? - CBBC Newsround. (n.d.). Retrieved October 19, 2020, from https://www.bbc.co.uk/newsround/25622442

Open source P2P money. (n.d.). Retrieved October 19, 2020, from https://bitcoin.org/en/