Bitcoin is a cryptocurrency with a great deal of promise but with issues still needing to be addressed if it is to hit the mainstream.
Bitcoin is a payment system and cryptocurrency – meaning an asset that deploys cryptography to make sure that online currency exchanges are secure – that has become one of the biggest such options in its sector. It was launched eight years ago in limited form, before receiving a wider open-source release the following year and has been growing rapidly ever since then.
Since it was first launched Bitcoin has risen to prominence at a remarkable rate. It is a system that allows users to make secure transactions without the need for a middleman service, with Bitcoin itself being a form of digital ‘money’ that users receive in exchange for public payment recording and verification. In turn, these Bitcoins can be used to purchase services, products and currencies online. In terms of value, one Bitcoin is the equivalent of 577.79 in British pounds, with this being determined solely by the online marketplace rather than by traditional financial authorities such as a central bank. At the moment, despite its rapid rise to prominence, it remains largely an online phenomenon – with approximately 600 meatspace companies currently accepting it as currency. However online firms that do include major ones like PayPal, Reddit, Dell and Microsoft, and it is seemingly making inroads into the online gambling sector. This is perhaps inevitable, as there were always links between the currency and gaming, via sites like SatoshiDice, and several online casinos in the UK now accept it. Among the big advantages it offers are the ability to make transactions around the world 24/7, full control of your currency and the fact that personal information is not required, while disadvantages include limited numbers of Bitcoins leading to demand outstripping supply, the fact that key features are still being worked on and ongoing volatility.
Predicting whether Bitcoin will rise or fall in value in the future is difficult simply because it has fluctuated considerably since its launch – including a 75 percent drop in value following the closure of the transactions between MtGox Bitcoin exchange and Dwolla by the Department for Homeland Security. However it should be noted that it took just weeks to regain its value and more and all of the indications are that it is becoming more accepted within the online retail world. The fact that big online companies are using it is an encouraging sign for Bitcoin, as is its fast growth in countries such as Russia, India, Brazil and Argentina. Where Bitcoin is still struggling to make any real headway is in more mainstream areas of business and the finance industry, for example the stock markets. In a bid to make this cryptocurrency more appealing to the likes of insurance companies and banks, the Bitcoin start-up called Blockstream was developed to allow these companies to build sealed-off blockchains of their own for the enforcement of contracts. The blockchain is the main technology driving Bitcoin but so far this strategy has met with limited success and concerns about how to effectively regulate a system that is rife for exploitation by money launderers, black marketers and other financial criminals are ones that will need to be resolved before Bitcoin can truly hope to go mainstream. Few major businesses will want to be associated with Bitcoin while this remains an issue.
In conclusion, Bitcoin is a cryptocurrency with a great deal of promise but with issues still needing to be addressed if it is to hit the mainstream.