Four Things You Need to Know About Bitcoin

2017 was an excellent year for Bitcoin. The cryptocurrency reached new heights and became one of the hottest commodities of the year. However, the concept of Bitcoin is still complicated to most people, and even some of the most tech-savvy individuals have difficulty fully understanding it.

As it stands now, Bitcoin is only eight-and-a-half years old, yet it is the oldest and most valued cryptocurrency on the market. The interest to invest in Bitcoin is at an all-time high. However, before you go ahead and make that investment, there are some things to consider.

 

The Price

The price of Bitcoin, like most things in a market, relies on the laws of supply and demand. Currently, the supply is limited to 21 million Bitcoins. Increased demand will force the price to go up as well. The number of people in the world who actually use Bitcoin is relatively small, so the price tends to fluctuate on a daily basis. As more people begin to use Bitcoin, the price will continue to grow. In early 2011, the cost of one Bitcoin was worth less than $1. Predictions suggest that as Bitcoin’s popularity increases, it will be worth hundreds of thousands of dollars to accommodate this demand.

 

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Is Bitcoin A Fad?

Bitcoin was one of the biggest topics of 2017. The cryptocurrency rose to meteoric heights towards the last few months of the year. Some vendors are accepting it as payment (Overstock and Expedia) and it is becoming a technology that major financial institutions use. However, given it’s rising popularity, the question remains: is Bitcoin just a new trend? A former Nobel-prize winner thinks so.

American economist Robert Shiller compared Bitcoin to the bimetallism fad in the late 1800s, which saw both gold and silver accepted as legal tenders. On the markets side of things, he discussed seeing some worrying signs in his data relating to the 1987 stock crash. On CNBC’s “Closing Bell” he said, “confidence in the valuation of the market is indeed the lowest it’s been since 2000. And when it got low in 2000, the market fell about 40%. So it was bad.”

Shiller is not the only person who has doubts about Bitcoin. In a critique of the cryptocurrency, JPMorgan Chase & Co. CEO Jamie Dimon said, “The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air.”

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Developments in Ripple

While Bitcoin may be the most popular form of cryptocurrency on the market, there are other digital currencies making a name for themselves. Ethereum and Litecoin are two cryptocurrencies which have rivaled Bitcoin for quite some time. However, Ripple is another digital currency which is starting to be a big player in the market. It’s value spiked in the last few weeks and is continuing on an upward trend. It is still worth considerably less than Bitcoin, but it is gaining newfound attention.

Ripple (Ripple XRP) was launched in 2012 to enable global financial transactions. Ripple’s goal is to connect the thousands of different banking ledger systems into one consolidated system and reduce the need for banking institutions to park massive amounts of capital in order to facilitate transactions. What sets Ripple apart from the other digital currencies its current use with well-known banking institutions.

 

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Debunking The Common Myths of Blockchain Technology

Blockchain technology has gained a lot of momentum over the past few years, especially with the rise of Bitcoin. To review, blockchain, or the “distributed ledger” technology, offers a way to record transactions or any digital interaction securely and transparently by design. It is a database that maintains a continuously growing set of data records. One of its biggest advantages is that it is public, so the transactions stored in in the ledger are transparent.

Blockchain has been one of the most fascinating technological advancements in recent years. However, as with many other technological advancements in the past, there are many misconceptions surrounding blockchain technology. Take a look at some of the most common myths surrounding blockchain.

 

The Blockchain Can Be Used For Everything

The code behind the blockchain is compelling, but it is not magic. Some blockchain experts believe that the blockchain and smart contracts (contracts executed using blockchain) will replace money, lawyers, and other arbitration bodies one day. The only problem is that the code is insufficient given the number of cryptocurrency transactions in the chain. Additionally, outside of Bitcoin, cryptocurrency as a whole is a long way from becoming a mainstream payment method.

 

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Can Bitcoin Become A Global Currency?

Global currencies are always evolving. For example, the dollar was once backed by the physical commodity of gold. This meant that you could take dollars to the government and exchange them for gold. Nixon changed this in 1971 when he announced that the dollar would no longer be backed by gold. Instead, the full faith and credit of the federal government would support the dollar. The rise in popularity of Bitcoin has created a form of currency that now rivals fiat money, especially as we move into the age of technology. It is not backed by gold or any government or bank and allows for complete anonymity.

Research shows that the number of active Bitcoin users can approach five million by the year 2019, with fifty-one percent of users being outside of the United States.

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