Bitcoin has been making headlines lately as the cryptocurrency continues to gain popularity worldwide, and its value continues to infinity. But in the last few years, Bitcoin has grown rapidly in popularity, and it may soon overtake traditional currency as the world's primary currency, not just as a long-term investment or as part of an investment portfolio but as a primary source of transactions and payments. Here's why Bitcoin could be the world's dominant currency?
What is Bitcoin?
Bitcoin is a cryptocurrency and can be used as a digital currency. Bitcoin is created and held electronically, without any physical paper or coins. It doesn't exist in a physical form like dollars or euros, and it's just data. This makes it easy to use bitcoin to send money anywhere in the world quickly and for very low fees. And unlike credit cards or PayPal, bitcoin can't be hacked or stolen by online thieves if you don't store your private keys on some online service that could be compromised. Theoretically, there is no limit on how many bitcoins can exist. At last count, there were about 16 million of them. But since each coin has to be mined individually, at an increasing difficulty as more are mined, it may take hundreds or thousands of years before we find all 21 million possible bitcoins.
How does Bitcoin work?
Bitcoin is a decentralized digital currency with no single authority governing it. It does not rely on any bank or central organization to process transactions. Instead, it relies on an internet-based peer-to-peer computer network of its users' computers. These users are called miners, and they use their computers to solve complex mathematical problems that help confirm Bitcoin transactions and ensure new coins are added to the system at regular intervals. New bitcoins are created as a reward for this work called mining.In addition to difficult math problems, these mathematical puzzles require immense computing power because they have been specifically designed so that the difficulty of solving them increases over time as more bitcoins are mined.
What are the benefits of Bitcoin?
- The benefits of bitcoin are seemingly endless. Bitcoin is currently being used in over 200,000 transactions a day, and every transaction takes an average of 10 minutes to process. Not only that, but bitcoin has no fees and is not subject to inflation
- Furthermore, bitcoin is borderless and can be used from any country worldwide without any limitations or issues. You don't even need a bank account or credit card to own bitcoin; you only need a smartphone and an internet connection. Lastly, bitcoins cannot be forged like paper money, and transactions cannot be reversed like credit card purchases, providing an added layer of protection for consumers.
What are the risks of Bitcoin?
Bitcoin is a decentralized and unregulated currency. As such, it has been vulnerable to hacking. In 2013, one of the largest bitcoin exchanges in the world, Mt. Gox was hacked. The hackers stole 850,000 bitcoins worth $450 million then, which led to bankruptcy proceedings for Mt. Gox and a drop in bitcoin's value and other cryptocurrencies, including ethereum and litecoin. This vulnerability has led some people to question whether bitcoin's safety is an investment opportunity or if it could be used as a dominant currency in the future.
Will Bitcoin become the world's dominant currency?
Digital currency like bitcoin was first introduced in 2009. Peer-to-peer technology enables it to function without a central authority or banks; the network manages the whole transactions and issuing of bitcoins. The bitcoin system has been designed to create new bitcoins at a fixed rate. As a result, bitcoin gains value over time. The total number of bitcoins will eventually converge to 21 million, meaning, unlike other currencies, there is a finite number of them, and they can't be printed endlessly by governments. Given these facts, it's easy to see why many people believe that bitcoin could become the world's primary currency. One reason is that countries are abandoning their national currencies instead of adopting another form of money.
The United States dollar, for example, had lost about 96% of its value since 1913, when it became a gold-standard country (meaning all its money was backed by gold). After being one of the most economically stable countries for decades, China now suffers from inflation rates averaging 6% per year - up from 3% per year before 1997, when it adopted a floating exchange rate regime. As an ever-increasing number of countries continue down this path, demand for an alternative monetary system like Bitcoin may soon skyrocket.
Bitcoin is a subject of heavy debate and speculation. Some say it will revolutionize our financial system, while others think it is another fault . But, it does not matter what bitcoin will be in the future because, for now, people are still using other currencies as digital money. In other words, bitcoin might be the world's dominant currency, and many people believe it can eventually be and are investing in this idea. So why are you waiting? Just go and grab bitcoin as an investment.