All you need to know about Bitcoin

Created using Alias Satoshi Nakamoto in 2009, bitcoin is making waves as one of the mysterious currencies to date. This piece of the article covers all you need to know about bitcoin and its future.

In spite of not having the existence as physical currency, bitcoins are widely accepted as payments.

It’s a virtual currency having no legal status. Real world currencies have regulatory bodies such as banks; in place are the laws and legal status.

Such currency can be printed or withdrawn from circulation if needed, the case is different from bitcoin.

Bitcoin is subject to decentralized supply having no central bank; it can be earned by a process called “Mining”.

This currency comes in the form of a reward by solving a difficult mathematical problem.

Transactions are recorded in a huge public ledger called Blockchain using strings of numbers as identifiers.

Acting as a payment network and operating 24/7, the system never cares where and whom you send the money!

After technology changing the business dynamics, should the increasing popularity of digital currency (bitcoin) be a surprise?

Alike other currencies or assets, bitcoin price is decided on the basis of the number of people willing to pay.

Not sure whether the bitcoin valuation is heading in the right direction. Are bitcoins truly worth the amount or value it is getting?


Is Bitcoin a Bubble Waiting to Burst?

Being right too soon is no less than being wrong. When we talk about July 2013, bitcoins were trading at $100 each!

Many posts and opinions came out in those days and one of them was by the South China Morning.

It states- if the bitcoins will get wider acceptance, their value is sure to increase.

Though the article went on and ended up in a dramatic way.

End of the piece states, the entire concept has flaws and it can never catch on!

The price of each bitcoin in January 2018- 10641.92 US Dollar!

See the price in July 2013 and today in January 2018, it has increased by more than 1000 times.

The reason behind the increase is, of course, people’s interest and their rush to open new accounts.

Hundreds of thousands of new account are opened daily.

Even though the currency has increased in popularity, the comments made in the year 2013 still seem valid.

Bitcoin is doubtlessly clever, giving rise to more applications.

But, it is a mere fact that bitcoins can never be legal in the form of money.

Those who are rushing to get the bitcoins with the hope to get higher returns in the future need to rethink.

As they may get the expected earnings or more or maybe nothing at all!


Why do People Like Bitcoins?

Bitcoin enthusiasts like bitcoin due to many reasons.

On the one hand, their supply is limited, and miners can create new automated units declines over time.

Moreover, the maximum limit is fixed at 21 million.

No doubt the supply is short, but bitcoins are yet to have an intrinsic value.

Bitcoins currently have no utility value as that of commodities like copper or gold.

Even the future value of securities such as stocks and bonds can be valued.

But, there is no promise of cash flow in the future when we talk about bitcoins, making it difficult for investors to judge the value.

People who are chasing bitcoins comment that bitcoins and fiat currencies are almost the same.

When interest rates across the globe are close to zero or go negative, it offers no income stream.

Hence, it doesn’t have any real value and it’s all an illusion.

The argument by chasers missed a very crucial point. Fiat currencies possess inherent value.


Here is an Example

Let’s take US Dollars into an example. Aussies are supposed to pay their taxes in US Dollars, if they fail to pay, they have to deal with rules and regulations in place.

Failing to pay can send someone behind the bars as well!

This understanding of the value of the currency makes people hire accountants and lawyers to deal with legal troubles.

This is where the US Dollar has its own value.

No Government is Backing Bitcoin and hence, it doesn’t have an Inherent Value!

Bitcoins are sure to have some critical drawbacks.

One of the key reasons why bitcoins can never replace the traditional currency is that its supply is limited.

When supply has a limit, the quantity of goods and/or service is sure to grow in the economy.

This follows the same trend that the price of goods and services in the associated currency must fall.

In case there is a fall in prices, business owners are sure to resist making an investment.

Reason being, they will have to sell more of their stuff to service their debts.

Customer’s buying behaviour will get adversely affected if they will see the prices declining!

No doubt, bitcoin can still be a currency for internet related transaction in the future.

With no intrinsic value and alternate currencies looming, things are clearly unsustainable.

At some point in time, it can burst! Should one invest in bitcoin?


Why Bitcoin Value will Decrease in 2018?

The dramatic rise in the value of Bitcoin gained a lot of attention at the end of the previous year.

Starting at $963.38, price got unbelievable increase to $19,870.62, almost hitting $20,000 mark.

In January 2018, it faced a drop of around $10,000 in value.


Rules and Regulations Matter!

Different countries have their own rules and regulations in place for crypto-currency.

When we talk about South Korea, investors of crypto-currency can be fined if they do not convert their virtual account from anonymous to their actual names.

In China, ICOs (Initial Currency Offerings) have been banned!

If countries will have strict rules implying on this digital currency, its usage and value is sure to feel the effect.


Missing Physical Presence

Of course, the usage of bitcoin in increasing online, but it doesn’t have a true value alike traditional currency.

It is all because of the demand that its value got a great increase in the previous year, but what’s next is unpredictable.


Bitcoin is Volatile in Value

Bitcoin is truly unpredictable and highly volatile.

Check out the rise and fall in its value in the recent past will give you all the reasons.

Considering the risk factor, owning oil or gold is far better than investing in bitcoins, says expert Goldman Sachs.



If you have monetary value, you are in the eyes of hackers.

You can come across many cases where hackers have done a great job, stealing the bitcoins valuing in millions of dollars.

In 2014, Mt. Gox, a Japan-based exchange platform was caught by hackers.

The platform lost 850,000 bitcoins valued $450 million.

More cases are there that are sure to question the security of the cyber ecosystem.


Increasing ICO Frauds

Adversely affecting the investor’s loyalty and demand, ICO frauds have increased over the past few years.

This has been seen as an opportunity to make a decent amount of money by doing some fraud.

The US Securities and Exchange Commission already caught PlexCoins and REcoins running fraud ICO and making more than $15 million.


What is the Future of Bitcoin?

The discussion on this online currency seems to be never-ending until the currency reaches a conclusion.

Bitcoin is a hot topic these days.

You can see almost every online source having something about the topic, some in favour while others disagreeing with the system.

Expert John McAfee predicts bitcoin hitting $500k in the coming 3 years.

The question was first visible Quora, but the prediction and this question also got a lot of attention.

The increasing value of bitcoin at the end of 2017 could be one of the reasons.

Vladimir Novakovski, a technologist and entrepreneur answered this prediction in his own way, keeping various aspects in mind.

Considering the prices in December, 2017 i.e. $15000, calculating probability of price reaching $500,000 we get this- $15000/$500,000= 3%!

Moreover, when we take volatility into account, estimation of bitcoin value is a tough task.

Calculating the same with the value in December 2017, keeping the same increase in mind, estimation would be biased.

What is the surety that bitcoin value will keep increasing in the same way?

With changes happening in the market in the coming 3 years, predictions must not be a surety.



Increasing value and use of bitcoin have given rise to many interesting conversations.

The future of bitcoin regardless of its increasing value is at high risk.

Predictions will continue to come until the bitcoin value reaches stability or it could be worth $0!

Related article: e-Banking: Meaning, Advantages and Disadvantages


Related Articles