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Bitcoin's history began in 2009, when purported Satoshi Nakamoto created the first blockchain space. Nakamoto's identity is still unknown, but he is widely regarded as the founder of bitcoin and the person who made the first bitcoin transaction. Establishing a currency with no leader is said to be a smart step that ensures transaction anonymity and enhances privacy. Although though Bitcoin has garnered huge popularity, including on Wall Street, other cryptocurrencies such as bit gold and b-money originated before bitcoin. The original purpose of bitcoin was to democratize currency and facilitate peer to global peer transaction without paying a fee to the intermediary such as a bank. Bitcoin is not backed by any financial institution or central government and is open to the public for online transactions. Today, eight years after the development of bitcoin, many business and users prefer the cryptocurrency for remittances, limiting exchange rate risk, inflation protection and as a new form of digital currency.
Bitcoin is the leader in the emerging digital currencies referred to as cryptocurrencies, which is anonymous and open to the public for online shopping and payments. Bitcoin aims to safely facilitate the movement of money electronically and guarantee privacy. Cryptocurrency such as bitcoin operates anonymously through the blockchain technology, which allows the addition of information on the gigantic ledge of transaction anonymously without security compromises. The bitcoin currency replaces the debit cards in payment of online products and its gaining worldwide attention since it reached $13.8 billion in 2016(McCallum, 2016). There are many reasons why individuals and business people should pay attention to bitcoin as the future of online currency and digital money. The mass adoption and acceptance of bitcoin by Dell, PayPal and Expedia is the main reason people and business should be paying attention to bitcoin as a digital currency (Glaser et al., 2014). Countries such as Argentina have started using bitcoin to pay online services such as Uber. In this essay, the paper will focus on reasons why we should be paying attention to bitcoin, counter-argument on the relevance of bitcoin as a global currency and its vast growth and acceptance.
Mass Adoption and Acceptance
One of the reasons to pay attention to bitcoin is its continuous mass adoption and acceptance globally by major online players. Major businesses such as Dell, PayPal, and Expedia have all accepted the currency. Many people globally have begun to understand the operation of bitcoin and how to acquire them to buy goods online. In addition, big business has played a part in popularizing the currency through offering discounts for every person who uses bitcoin to purchase goods such as NewEgg that offered 10%. Besides, in the United States, Bit pay advertises the selling of college football bawls tickets with bitcoin at a discount to popularize and influence acceptance of the digital currency in many companies (Böhme, 2016). The mass adoption and acceptance of bitcoin is a reason many businesses should pay close attention to bitcoin since it has the potential to become the global currency and one of the leading cryptocurrency in online dealings. Furthermore, the financial community is recently warming up for bitcoin and considering it a potential currency due to its ability to confirm transaction without relying on the third party. The international monetary fund (IMF) and world bank have recently said they see a potential in bitcoin and blockchain in the annual conference in Washington D.C (Hughes, 2014). Other major financial institutions such as The Bank of England have praised and positively acknowledge the role of bitcoin in decentralizing currency and making use of the technology.
Bitcoin is a Global Phenomenon
In addition, another reason to pay attention to bitcoin is its global presence as digital currency, unlike physical currency that is controlled and governed by each government and jurisdiction. Bitcoin has unique abilities and potential to serve as a global currency in online transactions. Many bitcoin hubs are growing and increasing fast compared to traditionally centers in North American and Europe. Argentina is an example of a nation that has incorporated bitcoin in an online transaction such as paying Uber transports and other products online and has been voted as most likely to adopt bitcoin as its main currency. In Africa, even though traditionally reluctant and slow to adopt new technology have adopted bitcoin at a great speed. Bitcoin hubs have pooped up in Kenya and South Africa and have started making ways in other continents. There is no doubt about the potential of bitcoin to replace currency as the global money for handling online transaction at a cheaper and faster rate due to lack of third parties. Business should start paying attention at bitcoin and make investments since many global investors have seen potential and invested in the online currency. Moreover, economic and technological powerhouses such as Japan, South Korea, and Singapore have taken a huge liking to bitcoin to facilitate a transaction in the Asian nations (Dyhrberg, 2016). China, the second largest economy in the world behind the United States, is the hub of bitcoin trading and innovative startups. The global acceptance of bitcoin makes it a viable investment for many businesses that seek to globalize their products and services.
Wall Street moving to Bitcoin
Wall Street is quickly moving to bitcoin, that will boost its illegitimacy one of the critics of bitcoin, and increase the value of bitcoin as one of the world’s leading financial institution. The issue of cryptocurrency is hotcake rights now since many Wall Street investors are quickly closing on bitcoin and investing in the digital currency to replace the government dollar that has many regulations and problems. One of the Wall Street investors, secondMarket founder, Barry Silbert has left his post as the CEO to pursue bitcoin full time and invest in the future of digital currency. This is more reason to pay closer attention to bitcoin with its massive following and willing investors on its back. The amount of influence and money Wall Street will bring to bitcoin will help increase its trust among the anonymous investors who use the bitcoin ledgers. Moreover, similar to other small business, Wall mart faces the risk of losing accounts with banks due to being involved with crypto-currency (Doguet, 2014). However, the fact that Wall Street is willing to risk and invest in bitcoin shows the potential and future growth of bitcoin as a powerful global currency for online transactions.
No Central Regulation
Bitcoin is decentralized and therefore cannot be regulated by the government or central bank. No central authority can take away the money since it is anonymously transacted with a high privacy and there are no trust issues involved. For people who have unraveling trust issues with the traditional banking system, it is a benefit. Bitcoin has no chargebacks that are common in credit card transactions. Once a bitcoin transaction is done, it is not possible to chargeback the transaction without the owner’s consent. This reduces the fraud activities common to other forms of currency. In addition, unlike credit cards that are insecure and can be easily hacked, bitcoin does not require a person to give any personal information but rather has two sets of key public key and private key. During the transaction, a person combines both the public and private key to make a legit and secure transaction. Bitcoin is revolutionizing the safety and trust online transaction, which had been diluted by the rampant cases of credit card fraud and theft.
In addition, the issue of regulation was one of the main bitcoin challenges since people question the authenticity of the currency, which is not backed up by any central government or financial institution. The nightmare to regulate bitcoin is starting to change as many economic powerhouses such as UK, China, Japan and the US are seeing bitcoin as a huge future industry, and they want a hub with it. The self-regulatory aspect of bitcoin has improved the trust and the pressure to regulate bitcoin globally. Big players in the industry such as Bitpay have hired experienced regulatory staffs who have the technical expertise to handle the organizational issues of bitcoin.
The main difference between cryptocurrencies such as bitcoin with government currency is the issue of inflation. Government currency can be subjected to inflation if the government prints more money is causing the excess money in circulation reducing its value. In the case of bitcoin, the original specification allows a maximum of 21 million of bitcoin to be created, after reaching the maximum, the number of bitcoins would not increase. This reduces the chances of inflation and rather promotes the falling of prices of goods and services, which helps the end consumer and the economy in general. In addition, bitcoin facilitates mining of coins through computing. For people who have computing powers and have settled the initial cost of investment and electricity, mining of coins is a matter of leaving the computer switched on. Another benefit of using bitcoin rather than government currency is that bitcoin is fast, easy and secure.
Creation of Business
The massive growth of bitcoin is opening up many businesses that use the platform by exploring new applications of Bitcoins technology and currency. The trading volume of bitcoin has risen, and many wealthy and famous investors have invested in bitcoin making its value increase and legitimacy improve. In Africa, bitPesa and Ghana’s Beam are examples of bitcoin technology and currency application that helps millions of people send money from overseeing to Africa at a cheaper rate and faster (Kiviat, 2015). The application of blockchain technology that forms the basis of bitcoin is being applied globally to adopt the cryptocurrency. For the first time, people who do not know each other can transact and their transaction verified by everyone through the public ledger. There is a lot of potential in bitcoin and ability to rise as the global currency promoting the need to pay closer attention at the cryptocurrency.
Counter Argument against Bitcoin
The counter-argument against bitcoin is the issue of mistrust is the main reason for the support of bitcoin as a future global currency. The fact that bitcoin is not backed by any central bank or financial institution is the reason behind the mistrust. The anonymity of bitcoin is its own worst enemy. There illegitimacy of the cryptocurrency since the owner is still a mystery and all transactions are conducted in privacy and anonymously (Bernard, 2015). People have a hard time trusting the authenticity of the digital currency and fear for the loss of their money. People who are against bitcoin argue that criminals and terrorist use bitcoin to fund their activities. The illegalization of bitcoin in some countries will make the price goes up since many people are still using the currency worldwide. Another counter-argument against the use of bitcoin is the regulation issues. Many governments are scared and do not like currency they cannot regulate or tax. The self-governing policy of bitcoin is not well received by the government and those who oppose blame the anonymity as the main contributor.
Another concern is the security of bitcoin. The reason against bitcoin is that bitcoin will eventually centralize after mining of bitcoins goes down making it vulnerable to attacks. Currently, the network is decentralized and is open to the public to make peer to peer transaction. Moreover, most people do not understand the operations of bitcoin and are scared to invest in the currency without full information on how to invest and track profits. JP Morgan chases senior management criticizes bitcoin calling it a fraud and has no potential to replace the government currency as the global currency for online purchases.
In conclusion, Bitcoin is growing fast, and people need to pay attention since it has the potential to become the global currency for online purchases and transactions. The anonymous peer to peer transaction allows people to send money directly without the involvement of a third person in fact, easy and less costly manner. The main reasons why bitcoin is growing fast is its global acceptance and mass adoption by big players in the world such as Dell, PayPal and potential investors including wall street investors and international financial institutions. The counter-argument against bitcoin is that it is not secure and the anonymous nature of the platform creates doubt among customers and potential investors.
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