Bitcoin. What is this mysterious crypto-currency that everyone has been talking about, and why is it making people risk everything they have to invest in it? Bitcoin came into existence in 2009 by an unknown person using the alias Satoshi Nakamoto—which in Japan is a common name like John Smith. The unknown man or woman created the algorithm that created bitcoin and set a limit on the number of bitcoins that will ever exist: 21 million, according to CNBC news.
Bitcoin’s prominence rose because it allows anyone to purchase merchandise anonymously and creates an easier system for international payments that are cheaper as Bitcoin is not tied to any country or subject to regulation. Since Bitcoin isn’t tied to any country or subject to regulation, there’s no so-called middleman or bank that will charge for their use similar to a credit card.
Edwin Schell, Upper School economics teacher, has said that buying into bitcoin is a risky business if one does not know what exactly he is doing, and since the price could rise or drop, people shouldn’t consider buying all in on it.
One way to get involved in Bitcoin is by bitcoin mining. Mining for bitcoins is the action of finding new bitcoins which is parallel to finding gold except on a computer. Miners compete to “mine” bitcoins using computers to solve complex math puzzles.
Miners run software to find the key that will open that padlock, and once their computer finds it, the box pops open and the transactions are verified. For finding this needle-in-a-haystack key, the miner is rewarded 12.5 newly generated bitcoins, according to CNN Money.
The current number of attempts it takes to find the correct key is around 1,789,546,951.05, according to Blockchain.info—a top site for the latest real-time bitcoin transactions. Currently, more than 12 million are in circulation which means that a little less than 9 million bitcoins are waiting to be discovered. The way the system was set up makes mining easy in the beginning and harder as the 21 millionth bitcoin is approached, according to CNBC.
Other ways to get involved in bitcoin is by buying on a bitcoin exchange such as Coinbase or Bitfitnex— some of the leading bitcoin exchanges—- or accepting them for goods and services. Bitcoin can now be used in some of the biggest retailers in the world such as Amazon, Microsoft, Paypal, Expedia, Overstock, and many more.
Blake Hall, a junior said, “I believe bitcoin will lose the hype and I think the price will rise but not to what it was in December. Personally, I would not invest in it because I don’t really understand it, and it’s a risk that I don’t think some people understand.”
Fellow student Didier Osias, a freshman who has had some experience in Bitcoin mining, said Bitcoin is a very risky business to invest in because of its consistency as the price could jump or drop at any second. He continued that bitcoin mining isn’t as easy as it sounds, and it does take a lot of time and money to get involved with no immediate return.
While the future of bitcoin is unknown, governments have begun to start regulating bitcoin as it;s become more of a common currency.
Categories: Business & Finance