Lately, Bitcoin has been a hot topic and has caused a lot of discussions among investors, entrepreneurs and stock traders. So with all this hype around Bitcoin, here are some things that you should know.
1 – What is Bitcoin?
Bitcoin is a global payment system and it is built on top of a technology called blockchain, which is essentially a virtual ledger that keeps track of every transaction. One interesting thing about Bitcoin is that no one <>person, computer or entity controls bitcoin, and the ledger is publicly distributed, so in theory, anyone can track the transactions to verify that they’re real. At the time of our recording, 1 bitcoin is equivalent to $14.866,64.
2 – Who owns Bitcoin?
Right now, mostly speculators and investors have bitcoin, and there aren’t very many of them. According to financial analysts, only about a thousand people own 40 percent of all the bitcoin in the world. It’s a little hard to estimate how many people own bitcoin — when you own it, it’s assigned to your digital bitcoin address, which is really just like an encryption key. And one person can have several addresses. But the best guess is that between 2 to 4 million people own a least some fraction of a bitcoin, and that number may be as high as 15 million people.
3 – Is Bitcoin anonymous?
The answer is No. Now is much harder to make anonymous transactions with Bitcoin and this is because as the ecosystem matures, many bitcoin service providers have started implementing KYC/AML regulations. KYC/AML stands for know your customers/anti-money laundering. This requires users to submit proof of identity and proof of residence.
It is also fairly easy to trace bitcoins. Bitcoins are usually bought from bitcoin exchanges, received as payment, or donated. With transaction details publicly viewable online, it is possible to trace where the bitcoin came from.
4 – Why is Bitcoin so volatile?
That is basically the single enduring question of the whole bitcoin story. One reason might be because so few people control so much. Any move by one of these bitcoin whales, or maybe even a group of them, can have a huge impact on the supply and price. It’s utterly unregulated and has no real infrastructure to speak of. It might be better now that it’s trading on actual exchanges like the CME, but prior to that, you could have entire bitcoin exchanges hacked and lose the records of bitcoin ownership, throwing the market into complete chaos. And we can’t forget the very high likelihood of fraud and manipulation on some exchanges. Bitcoin is basically brand new and suddenly worth tons of money and you should assume that anything and everything will happen.
5 – What’s the future of cryptocurrency?
This is a good place to note that bitcoin is not the only cryptocurrency built on blockchain technology and it won’t be the last. The tech enables all kinds of things to happen. A common example is a smart contract or a self-executing contract between two parties which automates transactions. The easiest example would be if someone used to say, Ether, a cryptocurrency that runs on a network called Ethereum, to pay for a package. Their side of the contract would communicate with Fedex’s tracking system and when and, only when the package was delivered, it could trigger a payment to the merchant. It can, of course, get way more complicated from there. The future is really less about Bitcoin — or any individual currency — and more about this decentralized, computerized ledger technology that can potentially have a huge impact on all kinds of financial transaction.
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