Bitcoin catches up news headlines time and again due to multitude of reasons and diverse perspectives of the experts and traders about it. Despite being a digital currency, its popularity has left the industry wondering and worried at the same time. While some financial specialists had termed it as ‘the future of money’, some termed it as the “drug dealer’s dream.” There are still some others who consider it as “disruptive” or “transformative.” Dealing with Bitcoin not only provides you complete anonymity which lacks in traditional banking and trading; it has also radically changed the way we do banking and online transactions. Let’s discuss how Bitcoin trading is moving the world ahead and what challenges lie for it in its onward march.
Serves as a speedy primer
In 1874, the world saw a man trading through Barter Exchange System. He was seen offering chicken in exchanging of a bunch of yearly newspapers. The photo of this barter exchange was published by a weekly newspaper, Harper’s Weekly. However it was not the first time that this happened. In 1555, Russian and Scandinavian traders were also reportedly involved in Barter Exchange System. This ‘bartering’ practice got a concept, when modern economist Adam Smith gave a boost to the practice.
This is just to apprise you that ‘exchange’ is integral and today, we have multiple ways to make a living out of it. As people used to barter metals, just for example, 5,000 BC ago; today, you barter currencies such as Dollars, Euros and Pounds. Evolution and progression are the fundamentals of life, so is the case with the finance industry. Bitcoin has gained speedy popularity over the fiat currencies in the past few years. Its market worth is constantly growing over the world’s leading fiat currencies such as KWD, BHD, Dollars, Euros, Pounds, Yen and every other.
Blockchain technology at work
Bitcoin’s investor-base is extending; while one the other hand, financial experts are in no mood to stop criticizing it. Amidst all these rise and grinds, investors still advise you to associate with it. Now, here is how you can possibly earn Bitcoins: You can mine bitcoin. It’s a virtual puzzle, where you have to solve Blocks and earn rewards at each. You can get paid in Bitcoins and you can also exchange your holding currency with Bitcoins. Whether you have earned or purchased Bitcoins, you must have a wallet setup to store them safe and secure. You can now use those Bitcoins for various purposes: As Bitcoin’s worth is volatile and mostly it increases, considering a long-term investment is the wisest. Or else, you can make quick transactions as well if you want. Now that you know the various uses of Bitcoins, it’s time to dive a little deeper into its trading. All bitcoin transactions get recorded onto Blockchains, (a bitcoin network), which substantiates the transactions.
Exchanging with Bitcoins
Irrespective of what currency you hold, its primary purpose is to facilitate buying and selling for you. Since bitcoins are still not used by a large chunk of the society, its valuation depends upon the investors’ behavior. Those who are involved in buying drugs and gambling with bitcoins pay a premium, because of the types and nature of goods which are often used for illegitimate purchases. On the other hand, if you are buying legitimate goods and services with Bitcoins, all you have to do is compare the value of the two and pay the difference to make it equal to Dollars or Euros. For example: If the product is costing you $50 and you want to pay with Bitcoins, you will transfer 0.01 BTC only.
The latest valuation of Bitcoin is perceived as an exponential burst in the economy. If we now speak about Bitcoin’s gradual rise, in 2014, the market witnessed a substantial appreciation in Bitcoin’s value, which consequently evoked more long-term investments.
Below are some examples of Bitcoin’s phenomenal growth
- Trading volume grew exponentially.
- Wallet owners increased from 3 million to approximate 8 million.
- World’s leading IT giants such as Dish Network, Microsoft, Dell and Expedia also came to accept and invest in Bitcoins.
- Total number of merchants accepting Bitcoins as payment has grown to nearly 85,000 as of now.
- There were only 340 Bitcoin ATMs available in the world few year back, whereas today, the number has grown to 1, 587.
- A loud and clear increase in venture capital investment has also been seen. Today, Bitcoin’s venture capital funding accounts to $1.07 Million.
A preview of Bitcoin market of the future
Let’s take a few examples from our current transaction practices – Despite the digital platform took an edge of the conventional methods, banks are still taking minimum 1 to 10 business days to complete international transfers successfully. This apart, there is more that are worth a read – Be it buying a home or car, other than time to start processing, there are several charges that you have to pay including registration and stamp duty charges. Dealing with Bitcoins, there you need no time and just the littlest transactions will successfully complete the process.
Well, that’s not it! Your every transaction in conventional system is tracked and recorded by your bank or some other third party hired by it. However, this is not the case with Bitcoins. Bitcoins allow you to play the game with complete anonymity, without the transactions being tracked. There is no system for tracing the transactions, nor will any third party ever own your credentials.
Potential challenges for Bitcoin industry
Following Bitcoins, there emerged a lot more other Cryptocurrencies but none could sustain the charisma and market penetration of Bitcoin. Bitcoin is still leading with largest base of investors and its price is appreciating steadily week after week, and month after month. Built on the strongest and most irrepressible network, this digital currency might seem to be the greatest inventions in recent times, however the fact holds something else. Bitcoin’s script language is believed to be susceptible to cyber-attacks. Some experts went on to add that the third-party systems and applications developed for Bitcoin exchanges are vulnerable to attacks by the hackers, that may lead to Bitcoin mugging and larceny.