Monday, November 18, 2013

A Quick Bit about Bitcoin

As the world continually globalizes the economy, there is always room for a new idea.  To have a global economy, one might suggest a global currency.  The major issue with a single currency is an agreement on a global scale.  However, there has been a solution: digital Bitcoins.

Bitcoins have become a huge success because they are a decentralized, protected currency.  Once a user is “verified”, any transaction that the user makes is publically recorded, to prevent double-spending or any action that could have a negative impact on the Bitcoin economy.  Bitcoins act as an investment that you can spend; many online services are now accepting Bitcoins as a form on payment because it can always be translated back to the user’s local currency.  Of course, there are positive and negative effects of a global currency.  The infamous ‘Silk Road’, specializing in an illegal drug service, allowed users to pay in Bitcoin.  Once this service was shut down, the FBI came to control about 1.5% of all Bitcoins in circulation.

Bitcoins fluctuate similarly to a stock; they rise and fall, as well as experience crashes.  In 2011, one Bitcoin cost $0.30, and then quickly rose to $32.  Shortly after its massive rise, it crashed; one Bitcoin costing a user $2.  This Monday (11/18/13), the cost of a single Bitcoin peaked at $600 USD, the highest it has been, ever.


“There are now about 12 million Bitcoins in existence. At $600, the market cap for the currency is around $7.2 billion. Some 50,535 Bitcoins are transacted every hour, according to CoinDesk.”

On a whim, I attempted to become verified to start buying and selling Bitcoins.  After approximately a week of verification steps on coinbase.com, I was finally able to buy my first Bitcoin… during the largest boom the currency has ever experienced.  The great thing about Bitcoins are the availability of fractional purchases.  Being a poor college student, I purchased .05 of a Bitcoin. $30 later, I was prompted with a message that told me I would receive my purchase around Friday.

I am completely on board with this Bitcoin idea.  I like how it is a growing field and how it could become a viable investment for certain parties.  Naturally, it will experience booms and busts, but because it is a currency, it will always be a viable option.  I have likened Bitcoin wallets to PayPal; the money is always there when you need to make a purchase.  With more and more online services accepting Bitcoin as a currency, it will soon become a standard for internet users.

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