Digital payment platform Bitcoin began in 2008 as a secure cryptocurrency, and it has evolved into a valuable digital exchange system. Bitcoins can be ‘mined’ by anyone with a suitable computer – they can use their machine’s processing power to handle transactions and pick up Bitcoins of their own. Those coins can be stored in a digital Bitcoin wallet and are secured with the user’s private key, which is required in order to make transactions or trade Bitcoins. The digital coins can be traded and sold securely online, with over 100,000 global merchants accepting the payment method.
The value of Bitcoin
Due to a limit on production, there will only be a maximum of 21 million Bitcoins in circulation – and this allows them to retain a real value and maintain themselves as a legitimate currency. At the time of writing, one Bitcoin was worth around £440.51 in the UK and $575.88 in the USA. The value of the currency fluctuates by day and by hour, as it does with any international economic system. Back in June of this year, it reached an all-time high value of $719.85 (£550.82) but since then, it has fallen slowly and levelled off at around the £450 mark.
Of course, it only carries value with merchants who recognise it – or through special coin exchange companies. Although some major brands will accept digital coins, many will not. Tech industries have been more willing to embrace the switch to Bitcoin, including social media platform Reddit and content platform WordPress. Global retail brands like Subway, Kmart and Sears have all signed up to allow Bitcoin purchases.
Risks and challenges created by Bitcoin
Is it a safe investment for the future? Perhaps not. However, it could still be well worth taking the risk. There are no guarantees with Bitcoin – it is an unregulated currency, which means insurance coverage is hard to secure and it is not necessarily recognized by the countries you wish to use the coins in. There is a serious lack of strong investment opportunities which can shield its funds from taxation – and this often puts off potential investors.
However, there are also huge gains to be made if investors are willing to take a risk. The nature of Bitcoin means that its value fluctuates frequently. That recent high of over $700 would have been a great time to sell Bitcoin stocks, and if the currency becomes more popular the value of any investment could increase dramatically.
Moving Bitcoin forward
A current challenge faced by users is the time taken for a payment to process – between 40 minutes to several days. Tech experts believe that they can speed up this process by making the currency ‘blocks’ – segments of data processing that create the Bitcoins and record their transactions – far bigger. However, users are concerned that this would make coin mining impossible for individuals using standard consumer technology, and would drive Bitcoin creation into the hands of corporations who can afford state of the art computer tech.
Bitcoin is still just seven years old, and it doesn’t seem to be going anywhere any time soon. The growth of apps and programs like the 21 Bitcoin Computer have allowed developers to play around with the mining technology, and find ways to sharpen up the process. In the future, mining could even take place on a smaller scale through mobile devices, as well as on a larger basis under corporate management. Researchers at VoucherBin found that 63% of shoppers are interested in using Bitcoin – but that just 11% have already done so. It will also need to reach out and better inform consumers about how it works.