The Bitcoin itself is a revolutionary new form of payment system founded in 2008 and a completely digital form of money. Security experts and digital freedom enthusiasts commend Bitcoin for being a unique system, because of its guaranteed anonymity feature. There are currently 10.71 million Bitcoins in existence, $207.929 million worth!
According to Bitcoin.org, “Bitcoin is an innovative payment network and a new kind of money… Bitcoin uses peer-to-peer technology to operate with no central authority or banks”. Bitcoin is a lot like cash for the internet. From general consensus among financial professionals and looking at the Bitcoin price index one would come away with the conclusion that the currency is unstable, potentially profitable but more of a novelty than an actual payment method that people use or would come to use on a daily basis. In December 2011 Bitcoin price index was $1,147.25 later falling to $522.23 in the same month. The same volatile movement in its price index still applies to the present day, where it currently sits at $454.44.
However, the number of daily transactions is steadily increasing from 79,868 to 89,326 in the first two weeks of September 2014, showing there is increasingly more support for Bitcoin. This is likely due to some of its many advantages, for example:
• It is the world’s first decentralised currency meaning there is no middleman controlling, trading or taxing our money.
• The technology provides access to pay/buy goods or services enabling us to deal directly with others rather than exchanging through a middleman. This in turn results in lower if any transaction fees as being a Bitcoin user, you will be contributing to the Bitcoin network therefore sharing the burden of authorising transactions.
• As there is no third party mediator Bitcoins cannot be seized or taxed and there is no payment tracking. This greatly increases privacy when compared to traditional currency systems, where third parties potentially have access to personal financial data.
Retailers who have taken on the Bitcoin prefer it to credit cards as it doesn’t carry as much of a risk to fraudulent behaviour; the Bitcoin cannot be manipulated and similarly cannot be stolen unless the thief has physical access to your computer. Retailers say Bitcoin payments aren’t a huge part of their business, but the niche is growing steadily and there is an increasing amount of retailers using Bitcoin as a form of payment, including Reddit, WordPress, Subway and Expedia.
Bitcoin is gaining support in the financial industry and by financial professionals who compare Bitcoin breaking down financial barriers to being as revolutionary as the internet breaking down information barriers. There is a split in opinion throughout the financial industry, however, with professionals more likely to see the negatives. Many people have recognised the need for a currency that is decentralised though, especially in a time where many feel we are seeing current power being abused; maybe a currency controlled by the people is needed.
With anything new of this nature, there are problems, and with the Bitcoin, more simplicity is needed regarding the whole process in order for it to appeal to the general public. But then again, the general public should be more informed about monetary decisions as they surely affect us more than the people that make the decisions.
In regards to the future of the Bitcoin it will most likely need to be regulated to have lasting power, which begs the question, who and by how much? And if Bitcoin is regulated, will it still be a currency controlled by the people?
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