Bitcoin Currency and Its Future - Coursework Example

Bitcoin Currency and Its Future Name: Affiliation: Date; Bitcoin Currency and Its Future Bit coin is a decentralized experimental digital currency that was introduced in the market by Satoshi Nakamoto in 2009. However, the authenticity of the inventor is questionable since he has never appeared to affirm the ownership. Bitcoins can be used to unanimously buy merchandise both locally and internationally. This is made cheap since the Bitcoins are not tied to the particular country and no regulations restrict their use. The small scale business men prefer Bitcon since they do not have the charges related to credit cards. Due to flexibility of Bitcoins, people are buying them hoping that one day they will grow in value (Lancelot & Tatar 2013, pg.23). The technology of Bitcoin is a bit complicated, and that is why the Bitcoin market has flourished. Since most people cannot create similar software’s, it becomes hard for any company to influence the Bitcoin market. Basically, the Bitcoin is generated through cracking complex mathematics problems which gives the flow of Bitcoin as Nakamoto asserts. For one to be a member in the Bitcoin market, one has to download Bitcoin software in the PC and switch to the Bitcoin network (Lancelot & Tatar 2013, pg.23). The computation that the machine does are not randomly selected, rather they are a constellation of what actually happens in the entire Bitcoin universe. Bitcoin transactions are just like normal money transactions since the record of value is involved. The difference comes in because it is a transfer between one Bitcoin wallets (unique address of the Bitcoin) to the other Bitcoin wallet. The cryptography role is normally played by the private key that can only be confirmed by the Bitcoin address. The wallet in this case is similar to the bank account and the private to the pin. Private keys are usually used to sign progressive transactions, and this provide mathematical prove that the transactions have originated from the owner. The signature usually prevents the transaction from being altered by anybody who may be willing to alter in that particular case (Rychlewski 2013, pg.44). All transactions are usually broadcasted between the users and later confirmed by the network through the process of mining which is described above. So far, it is evident that Bitcoin is just an advanced and sophisticated method of sending money and not the ludicrous “money laundering” as posited by the uninformed public. However, the issue of computation is a bit complicated but authentic in the long run. Although they are no statistics which explain the whole Bitcoin statics and finances, Research has postulated that at least $147000 worth of electricity is used to maintain the computers that support system for at least 24 hours. Many people tend to ask whether Bitcoin is real money. This question can be answered after evaluating the abilities of Bitcoin and ascertain whether its parameters can suffice the test. One common thing about money is that it must be able to pay bills and other utilities which are necessary to the survival of an individual. Think of Euros, dollars, yen, they all have one common characteristic that they can pay utilities and bills. Similarly, when it comes to Bitcoin, they can easily pay services as posited earlier (Guttmann 2013, pg.34). Paper money or Fiat is the common accepted money, and it is a means of payment and at the same time unit of account. The standardized nature makes it possible for it to buy goods and services at compared prices. Similarly, Bitcoins are accepted, and they can buy goods just as any other currency would do. Moreover, money should have storage value, and this is also a major characteristic of the Bitcoins. Currently, Bitcoin is highly accepted in most countries though Russia and some Asian countries have restricted its use. The actual Bitcoin value is $621 for one Bitcoin and the other respective rates to be found through calculation. However, the Bitcoin has been experiencing challenges now and then making it hard for the currency to grow. For instance, the traumatic event which was experienced in Mt.Gox in Tokyo left the Bitcoin Company at a loss after its website and twitter handle was closed as a result mere misunderstanding. This left the company in chaos after the company’s website was hacked and thousands of Bitcoins were stolen (Guarino 2013, pg. 45). The Bitcoin currency has been fluctuating, but the conversion rates in the website indicate that 744,000 Bitcoins have worth of $386 million as per the latest update. However, the details provided are scarce, taking into account that Mt.Gox went dark abruptly. If the number is particularly correct, it means that 6% of the 12.4 million Bitcoins created since the inception of the currency have been taken out of circulation. The fall of Mt.Gox was a complete blow to the company, and it has discovered that the cyber crime has been going on over quite a long time, and it has significantly affected the exchange rates globally (Goodale 2013, pg. 47). It is advantageous to use Bitcoin since one can make payments fast and easy. The Bitcoin payment can be easily made by just using an app on the smart phone or a computer. One does not credit cards, pin or documents to make payments. All that is essential is confirming the address of the receiver of the money. Therefore, issues of delay and errors are ruled out hence making it suitable for use. Moreover, such payments and transfers are very fast and within a minute everything is done. Bitcoins transfer and usage are secure due to the use of military grade cryptography which ensures that any transaction carried out is secure. No individual expects the actual, owner of the wallet make transactions in the wallet. However, the level of security is highly dependent on the owner and his ability to use Bitcoin wallet. The identity which is behind the Bitcoin wallet is highly private since the transactions are carried out inform of addresses and even these are created privately (Rychlewski 2013, pg. 34). The transaction fees involved are minimal and at times not any at all. Banks and other financial institutions will charge a considerable amount for each transaction, but the Bitcoin currency is cheap to transact. Therefore, cumulatively, a lot of money is saved compared to the other situation when one is using banks. On the other hand, Bitcoins have also some limitations which hinder their use. For instance, the payments made using Bitcoins are irreversible since there is no central authority which supervises the entire system. The only way out that one can recover the money is through refund by the individual who received the money which is at times difficult. In cases of dishonest merchants, one ends up losing all the money. The future of Bitcoin seems to be bright considering that it has managed to fetch market all over the world. Despite the few technical hitches, in Mt Gox where thousands of Bitcoins were stolen, it is beyond a reasonable doubt it has a great future. Its ability to trade with fiat money makes it convenient, and it is believed that it will continue to grow with time. Moreover, its efficiency and cost effective nature will also make grow to greater heights (Guttmann, B. 2013, pg.34). The increased level of technology in the third world countries will also promote its usage especially in sending and receiving money. The chart below illustrates the growth trends of the Bitcoin and its prospects in the future. References "Gaming System, Gaming Device and Method for Utilizing Bitcoins" in Patent Application Approval Process. (2013, April 4). Computer Weekly News, 2, 12. Bitcoins - the Debate Rages. (2013, August 20). CPI Financial, 3, 22. Fitzsimmons, T. (2014, January 23). Bitcoins: More Guidance from the CRA. Mondaq Business Briefing, p. 23. Goodale, G. (2013, November 23). Adventures in Buying Bitcoins: A 'How To' Guide, Sort Of. The Christian Science Monitor, 2, 14. Guarino, M. (2013, October 26). Bitcoins Used in Murder-for-Hire? Silk Road Creator Faces Multiple Charges. The Christian Science Monitor, 3, 23. Guttmann, B. (2013). The Bitcoin Bible All you need to know about bitcoins (1. Aufl., neue Ausg. ed.). Norderstedt: Books on Demand. Lancelot, R., & Tatar, J. (2013). What's the deal with Bitcoins?. Pennington, New York: People Tested. Researchers Submit Patent Application, "Gaming System, Gaming Device and Method for Utilizing Bitcoins", for Approval. (2013, April 4). Computer Weekly News, 2, 14. Rychlewski, L. (2013). Lost Bitcoins. BioInfoBank Library Acta, 2(1), 3043. Read More