Despite the fact that many experts believed that its end is just right behind the corner, Bitcoin is still standing tall. It had its ups and downs, but it seems that it will continue surprising us for quite some time yet. You can hear the voices of people who claim that it isn’t long before Bitcoin replaces other currencies. Is it possible? In a second, you’ll learn how blockchain technologies are used by different groups of people. Let’s go!
What is Bitcoin & who uses it?
Bitcoin is a decentralized cryptocurrency. What’s most surprising is the fact that there aren’t any intermediaries involved in the transactions. It means that there is no central bank or a financial institution that would control the system. This cryptocurrency recently became extremely popular among two groups of people. The first group are the users who use Bitcoin to purchase products and services across the internet. There are several reasons why they choose Bitcoin over any other means of payment.
- There is no financial institution involved in the transactions, which means that the users are able to purchase products and services that otherwise would be unavailable for them. It allows people to sell and buy products without being tracked by the government. Many people use Bitcoin to order drugs and guns from anonymous suppliers, though that not all. In countries without religious freedom, Bitcoin allows people to practice their beliefs without ending up in jail. It is not impossible to track people down who use Bitcoin, though when combined with VPNs or TOR, the safety of the users is drastically increased.
- Although currently there aren’t that many companies that allow its customers to use Bitcoin as a means of payment, the situation is slowly changing. Currently, Twitch, AT&T, and Bitcasino allow users to pay with Bitcoin instead of fiat currencies.
- Many people try to find alternatives to the traditional banking system. One of the consequences of the financial crisis of 2007-08, is that a significant number of people have stopped trusting big financial institutions to handle their money. Bitcoin was created just after the financial crisis – in 2009.
Apart from people who use Bitcoin to pay for services and products while remaining anonymous, there are also those who treat Bitcoin as a speculative asset. They think that the volatility of Bitcoin could make them rich, which isn’t an unusually bold assumption. Bitcoin is now worth almost 1000 times more than it was 10 years ago. There are several factors that attract investors:
- As compared to Forex trading, Bitcoin trading isn’t as costly. It doesn’t mean that you cannot lose money. Instead, the minimal costs would be much lower than in the case of Forex trading. Why? In the case of the Forex, you would have to pay the brokers, which would quickly add up to bigger sums. Bitcoin trading, on the other hand, lacks those costly fees. If you want to turn Bitcoin trading into a hobby, then you would probably want to avoid spending large sums of money.
- Bitcoin is highly volatile, which is both an advantage and a disadvantage. Why? As compared to Forex exchange, the Bitcoin exchange experiences much larger swings. People cannot be sure whether they won’t suddenly lose their money, but at the same time, if they are lucky, they might win much more money. It’s not for those without the nerves of steel, though the potential reward is huge. It certainly requires a lot of luck, even more than in the case of foreign exchange. Still, the sudden changes make it a dangerous, but possibly rewarding game. There were times when Bitcoin more than quadrupled its worth in a matter of weeks. It is next to impossible to predict what the future holds, but it doesn’t dissuade the people from trying to find out whether they were born lucky.
What comes next?
As a relatively new technology, Bitcoin is attracting people who think that in the future, it could change how we view money. We are used to the current system, though the recent financial crisis has shown that we shouldn’t put too much trust in financial institutions. It doesn’t mean that just because something is “new”, then it necessarily is a better alternative. Although Bitcoin is one of the most stable cryptocurrencies in the world, it cannot match all but few fiat currencies. It’s not to say that this state of affairs won’t ever change. If in the following years, the financial system will experience a catastrophe of some sort, people might become even more distrustful of the old financial system. If, by this time, the security of the Bitcoin is improved and the attacks of the hackers will become a rare occurrence, then perhaps we could experience some radical changes.