Behind the new digital currency stands a community well versed in what Bitcoin brings to the table, but many financiers have looming doubts about Bitcoin. The press surrounding Bitcoin is often blown out of proportion and the more sensationalist reports are without education on the facts. For Bitcoin and the cryptocurrency community, continued adoption will be based on how well it educates consumers, businesses, and governments. How will Bitcoin continue to overcome the challenges it faces and shift the paradigm?
What is Bitcoin?
Bitcoin is a digital currency and peer-to-peer (P2P) payment system centred on cryptography and security, and is completely decentralised from any central banking institution. Bitcoin is a method of payment for electronic commerce (e-commerce), bricks-and-mortar stores and P2P transactions. This rapidly-growing digital currency has a worldwide reach that allows for fast, easy and secure transactions to anyone in the world.
Many Bitcoin users buy and sell using a variety of methods, most popularly through exchanges (either online or in-person), mining, or as a payment for goods and services. For Bitcoin, mining is of utmost importance. Put simply, each miner is given a reward for verifying a block of transactions and ensuring each transaction is valid and secure. Mining a block helps create new Bitcoin and by doing so, the user is given a portion of each Bitcoin they mine.
Many popular Bitcoin exchanges allow users to create an account and deposit local currency from a personal bank account in order to purchase Bitcoin. This is a very simple means of attaining the sought-after digital currency.
Bitcoin carries many benefits, with the technology to support its large infrastructure. Bitcoin is the largest payment network in the world, simply because it spans the entire world. Funds can be sent and received to any country, from anywhere. You need to send money to your friend in Paris? No problem, Bitcoin can make this possible in seconds, without having to deal with exchange rates. Additionally, Bitcoin gives every business the ability to transact at low cost and low risk of fraud.
Unlike fiat currency, Bitcoin is not susceptible to inflation or deflation. Instead, Bitcoin works on simple principles of supply and demand. This is not to say that Bitcoin is completely unlike the dollar. To be widely accepted, Bitcoin must be viable long- term. According to finance, for a currency to be viable it must have value over time, limited supply, and be divisible and portable.
The viability of Bitcoin will be driven by consistent growth and adoption, which will enable it to stay valuable over time. In addition, the supply is limited because the mathematical algorithm only allows for a certain amount to be mined; a finite amount of 21 million, a figure to be reached in 2140. Bitcoin is also easily divisible and portable, allowing users to send and receive fractions of Bitcoin through mobile devices.
Challenges of New Payment Technology
In a recent press release, Bitcoin core developer Jeff Garzik stated: “Bitcoin is growing up, no longer a hobby but now a professional payment network used worldwide.” For a new currency such as Bitcoin, price volatility is a steep hill to climb when speaking with many financiers. This technology challenges our normal thought processes and solves many issues with payments in the current climate.
It is unfortunate that negative publicity often overshadows everything the digital currency has to offer. We have witnessed everything from a ban on mobile applications by Apple to the takedown of the infamous Silk Road and money laundering, among many others. There is no question that breaking the law requires corrective action to be taken, but the reality is that some use money, whether fiat or digital, to commit crimes. Bitcoin just happens to be more traceable than the dollar. Isn’t that a good thing?
Bitcoin proves its resilience throughout these times with the support of the entire Bitcoin community. These individuals believe in the future of digital currency and its mainstream adoption. Last year, some Bitcoin companies reported transaction volumes that tripled in a single month. This was due to exciting publicity along with individual curiosity, bringing new light into Bitcoin as a go-to payment method, with increasing support from forward-thinking corporate treasurers.
Mainstream adoption of Bitcoin will be driven by increasing customer facing technology throughout retailer platforms, both brick-and-mortar and e-commerce. Consumers will be given even easier means of attaining digital currencies, such as the
Lamasuu automated teller machine (ATM)
, cold storage wallets and mobile phone applications. However, as any new technology it will take repetition and education. No matter where you are, there are many meet-ups throughout the world that provide Bitcoin education to anyone who shows an interest. The future of Bitcoin has only just begun.
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