During the early days of Bitcoin, transactions were mainly among those involved in illegal activities as a means to avoid regulations and oversight as well as hiding full identities. In those days Bitcoin was largely used for drug trafficking and other shady businesses. However, that has rapidly changed over the years due to several factors. Bitcoin Up is also helping many investors in bitcoin trading.
Reasons Behind Bitcoin’s Popularity
First, the Bitcoin global popularity increased after the financial crisis of 2008 which led many to question the stability of national currencies and fiat money. On top of this, 2013 saw a rapid increase in Bitcoin’s value making it a much more attractive asset to hold for average investors around the world. Another factor is that companies have started accepting payments in Bitcoin partially because they can save 2-3% off credit card transactions if they accept them in Bitcoin rather than fiat currencies. Bitcoin’s international infrastructure has also advanced, making it easier to obtain Bitcoin in many countries around the world.
Volatile Nature of Bitcoin
However, Bitcoin is still not perfect and remains quite volatile for investors who choose to trade Bitcoin as a commodity. Bitcoin is not controlled by any central authority which means that its value can change even within just hours or minutes compared to other more conventional currencies whose fluctuations are much lower. Bitcoin can lose 50% of its value within days whereas national currencies like US dollars would take months before experiencing such substantial changes in their values (1). However, this problem is only temporary as Bitcoin becomes more widely adopted which stabilises its value over time. Furthermore, Bitcoin cannot be counterfeit unlike physical cash so there’s no risk of spending them without having the necessary amount of Bitcoin on hand.
Success of Bitcoin
Despite these setbacks, Bitcoin’s small but significant success is considered a milestone that places it as one of today’s most popular and perhaps future dominant currencies (1). Bitcoin has shown promise and it remains to be seen how this cryptocurrency will impact the future of financial transactions.
Efficient Peer-to-Peer Network of Bitcoin
Bitcoin has recently exploded in popularity, becoming almost mainstream. Bitcoin is a peer-to-peer decentralised form of digital currency that uses cryptography to maintain security and anonymity (Nakamoto 2008). Bitcoin was conceptualised in 1998 by Satoshi Nakamoto (thought to be possibly a pseudonym), however, the first official Bitcoin transaction did not occur until January 12th, 2009 when Florida programmer Laszlo Hanyecz offered 10,000 Bitcoins for two Papa John’s pizzas (Dowling 2013). Shortly after this event Bitcoin became more widely known through technology blogs like Slashdot and Reddit, but struggled to gain widespread public attention until 2011. From 2011 until 2013 Bitcoin’s value went from $1-$20 USD per Bitcoin. Since then, Bitcoin’s price has increased exponentially, recently reaching $1,120 (Dowling 2013). Bitcoin has become very popular in the last year due to recent successes like the Bitcoin Foundation’s regulatory efforts and Bitcoin’s use by major companies like OkCupid and Overstock.
Bitcoin is a cryptocurrency that was introduced as open-source software in 2009. Bitcoin uses peer-to-peer transactions, mining, and other technological feats to operate without central authority or banks, unlike government-issued currencies. Bitcoin has been called a revolutionary technology by many, due to its innovative nature.
In its first year of use, Bitcoin experienced a dramatic rise in price from pennies per Bitcoin to 30 dollars per Bitcoin. The current value of Bitcoin fluctuates around 650 dollars per Bitcoin, a decrease from the peak 2017 value of over 8000 dollars per Bitcoin. There are many reasons cited for this increase and subsequent decrease in popularity and value including increased regulations, lack of anonymity (while most cryptocurrencies are designed with anonymity as an integral function), security breaches leading to theft, hard forks (creating Bitcoin cash), Bitcoin’s high energy consumption, slow transaction times, and general misunderstandings about Bitcoin.
Despite the controversy surrounding Bitcoin, many major online retailers accept Bitcoin as an alternative to government-issued currency. Companies such as Microsoft, Dell, Newegg, Overstock, Tesla, and Whole Foods all accept Bitcoin as payment for products, which has only added to the Bitcoin global popularity. While Bitcoin remains controversial due to its lack of regulation or central authority, it is expected that cryptocurrency will play a much larger role in our digital economy in the future.