Is Bitcoin Still a Thing?

By Paul Michael on 22 August 2016 0 comments

Bitcoin. You may have heard the term. You may even know someone who has a bunch of them. But is Bitcoin just a fad that's dying out, or is it here to stay?

Let's dive into a brief history of Bitcoin, the troubles it has faced, and the answer to the question on so many lips…is Bitcoin still a thing?

What Is Bitcoin?

Bitcoin is a form of currency that falls under the umbrella of "cryptocurrency." To keep this simple, think of Bitcoin as currency that exists primarily in cyberspace, at a specific Bitcoin address that is linked with an access key. Unlike every other form of currency, it is decentralized, meaning large banks and corporations have no control over it. Plus, Bitcoins are not produced in the same manner as dollars or euros; they are generated by people through a process known as mining, which requires software that can solve complex mathematical problems.

Perhaps the biggest selling point of Bitcoin is the finite nature of the currency. There is something called Bitcoin protocol, and it stipulates that only 21 million Bitcoins can ever be created. That's it. So clearly, as the demand for Bitcoins increases, so, too, does their value. (It's a little like trying to move into a town or city that has outlawed new construction. The houses in that area continue to rise in value as more people want to move in.)

Another huge selling point is that it is completely anonymous. Plus, Bitcoin has tiny transaction fees, it's fast, and it's transparent. Every transaction is recorded (which is why Martin Shkreli's claim about losing $15 million in Bitcoins was bogus).

How Did Bitcoin Come to Exist?

Created by Satoshi Nakamoto, Bitcoins came into existence in 2008 after his paper Bitcoin: A Peer-to-Peer Electronic Cash System was published. The idea was to create a low-fee electronic payment system that was free from any central authority, and easily or instantly transferrable. It wasn't until two years later that the first Bitcoins were used, and at the time they were worth less than a penny each (today, Bitcoins are valued at over $560 each, but the price fluctuates daily, and has hit a high of $1216.73). The biggest draw of Bitcoins — anonymity — meant that it became the preferred unit of currency for illegal activities on the online black market, such as the now shuttered Silk Road. However, as the price of Bitcoins rose meteorically, people who simply wanted to make money took an interest.

How Do You Acquire Bitcoins?

You can set up an account at Bitcoin.org in seconds. Once there, you choose a wallet, and can then get Bitcoins in a few different ways:

  1. Simply purchase them. You can set up a currency exchange with your bank, and have the Bitcoins (or pieces of a Bitcoin) deposited in your account.
     
  2. You can accept Bitcoins as a payment for goods or services. If you sell items online, you can ask to be paid in Bitcoins. If you freelance, you can do the same thing. It's not easy at the moment, but as more retailers and people realize the value of Bitcoins, it could become as natural as using PayPal.
     
  3. Mine Bitcoins. This is the hardest part. It would take a much longer article to explain it all, but just know it is not exactly a walk in the park. With the current difficulty level and requisite hardware, it will take you 1,367 years to mine just one Bitcoin!

What Troubles Have Plagued Bitcoin?

Aside from being associated with the sale and purchase of illegal guns, drugs, and other black market goods and services, Bitcoin has certainly had some setbacks.

For starters, Bitcoin is a digital currency, and anything digital comes with hackers ready to find a weakness and exploit it. Just last week, a major Bitcoin exchange called Bitfinex was hacked, and 120,000 Bitcoins (roughly $60 million) were stolen. Back in 2014, another exchange, MtGox, was hacked and lost over 850,000 Bitcoins, valued at the time at over $620 million!

Not only that, but some authorities refuse to even acknowledge that Bitcoin is a legitimate currency. Recently, a judge in Florida ruled that Bitcoin was not considered money because it "cannot be hidden under a mattress like cash or gold bars." Ironically, this statement is going to have people running to use Bitcoin if they now realize they can legally launder money with it. What's more, you can actually have physical Bitcoins. You can even print them with a 3D printer. As long as they are linked to a Bitcoin address, and have an access key, they work. But for millions of people, this idea of money existing only in cyberspace is very disconcerting.

So…Is Bitcoin Still a Thing?

In a word, yes.

Although the price of a Bitcoin is less than half what it was in 2013, the thing that makes Bitcoin a success is usage. Several years ago, few retailers were willing to touch Bitcoin as a method of payment. Now, more and more blue chip, big name companies are taking Bitcoin, and as more join the list, Bitcoin will become even more enticing. Here are just a few of the many companies now taking the cryptocurrency:

  • Expedia
  • NewEgg
  • Amazon
  • Overstock
  • AliExpress

With so many big names willing to accept Bitcoins, and the price of them rising as more people get into the market, Bitcoins are still viable and may even become more attractive to the average consumer. So, if you're interested, you may want to consider getting in sooner rather than later. After all, the person who spent 10,000 Bitcoins on two pizzas back in 2010 would have $4 million today!

Are you over Bitcoin and cryptocurrency? Or are you still mining?

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