Bitcoin is a digital, anonymous currency that’s garnering much attention as the future of money. It’s sexy, fun, and easy to trade, but it does have some glaring inherent risks. This may be why China recently outlawed this cryptocurrency and several other nations may follow suit. The world powers are scrambling to make sense of this digital currency.
World powers are having a bit of a hard time reacting to the rise of Bitcoin, a savvy, anonymous, decentralized digital currency, which came into existence in 2009.
Bitcoin is stored in a digital “wallet” and is “mined” by computers that solve mathematical puzzles. This currency has had a chartered career. It saw a phenomenal rise when its value skyrocketed from $13 in January 2013 to $1,242 on November 29, ’13, higher than the price of gold. But its value plummeted to $830 on the world’s largest Bitcoin exchange, BTC China. This was attributed to China’s ban on providing Bitcoin-related services and products on its banks.
This had caused quite a dent to the Bitcoin, as data showed that nearly 1/3rd of the world’s Bitcoin transaction was conducted on the BTC China at that time.
This downsizing of Bitcoin’s value led to a lot of reactions from other world leaders like France. Though it saw a clear potential for growth in Bitcoin, the French Central Bank warned against using this cryptocurrency. It attributed this decision to the volatility inherent in this cryptocurrency and also due to a lack of regulation. The Bank of America Merrill Lynch, however, took a different line when it put out a statement that Bitcoin has the potential to become a major payment option for e-commerce, and it has what it takes to take on traditional payment methods like credit cards, for example.
Bitcoin Value Dropped After US Crackdown on Silk Road
The US crackdown on Silk Road, a website that the US FBI felt was used for drug trafficking, considerably hurt Bitcoin. But this was only in the short run. Since the people associated with Silk Road made loads of money, this attracted many business people from all over the world. Silk Road thus proved to be useful publicity for Bitcoin in the long run.
British tycoon Sir Richard Branson also jumped onto the Bitcoin bandwagon when he announced that the Galactic space flight venture by Virgin would accept this digital currency.
How Should You React to Bitcoin?
Though the world leaders remain wary of Bitcoin because it can be used for money laundering, crime, selling and buying drugs, etc., the fact remains that it’s also a largely democratic form of money. There is also credence to the line of thought that central bank tinkering with the money supply has induced global recessions resulting in savings of ordinary hard-working people globally being washed away in seconds.
The global banking system is in many ways based on deep-seated corruption and profiteering. What does this mean for the average citizen, like you? Should you invest in Bitcoin, whatever your country thinks?
The answer is yes. Bitcoin is a digital currency. It can’t be held or touched, like traditional money. It’s also a volatile currency that’s created by anonymous programmers using a method that’s too complex for most people to understand.
But, do know that digital currency is the future of money and that even if Bitcoin fails, one of the over 1600 cryptocurrencies globally will take over. The world and you, thus, have to acclimatize to the digital currency world and learn to profit from it.