If you don’t know what bitcoin (BTC) is all about, then you have come to the right place. I am going to sum up what I have been able to understand about this digital asset. Here’s your simple guide to understanding bitcoin, bee tee cee.
Are you ready? Doesn’t matter here we go.
Open your wallet. Take out your money, if you aren’t broke already because then your money has already been taken out by the products that you needed or the bills that you had to pay, cruel world…I know right.
So with money, what we are able to do is buy things. That 1$ bill you have is something that is considered valuable. With it, you can buy something in the real world. Same goes for bitcoin in the digital world. Bitcoin is considered something that carries value in the digital space. If you have a digital wallet with bitcoins in it, congratulations you have value in the digital space. Now you know what is bitcoin. Okay end of the story, bye.
Wait, it’s not that simple.
In the real world, state banks are controlling the flow of money right. That means your country’s currency is being controlled by the national state bank. With bitcoin, there is no state bank. Satoshi Nakamoto, an anonymous entity behind the creation bitcoin, made bitcoin decentralized using the technology of blockchain. Meaning there is no one single controlling party such as a central state bank that manages the flow of value. Instead, there are nodes of miners. Miners are responsible for maintaining the network. They are the ones running the network.
Now, things might start to get clear why there is so much fuss around it. Governments cannot control bitcoin. It is not passing through their state banks. It is operating in parallel. Now, this has its advantages and shortcomings.
Oh, there is an economic crisis. Fiat currency frameworks have broken down, but wait…we have decentralized bitcoin right? Let’s use it.
Wait the governments aren’t controlling the network? What if criminal use it to carry out illegal activities? Too late, it already is being used by criminals. This is one of the major reasons why the image of bitcoin and cryptocurrencies is so negative in the mainstream media, illegal usage. Lack of regulations and laws have made cryptocurrencies a favourite tool for criminals. But hey, USD is also used for illegal activities right? Wait there’s more, the price fluctuations.
It has only been over a decade since bitcoin erupted out on the financial scene. The market capitalization of the bitcoin and crypto world is still not that large as compared to banks and institutions. Now, whale traders use this to their advantage. They manipulate the market and the bitcoin price. Whales are going to buy bitcoin in large amounts. Oh, bitcoins in circulation have fallen in down in number owing to the accumulation. Prices have gone up. Now should we use bitcoin as a currency or should we store it? Is it the digital gold?
People are starting to buy bitcoin. Fear Of Missing Out (FOMO) is taking control. Wait, the whales just released a lot of bitcoins. Supply is back up. The price is going down. What should we do? Sell it before it comes down even low in price? Are whales going to buy it at a low price now and sell it when it becomes higher again? When will that happen? Manipulation, the market is being manipulated by some strong forces. Not so decentralized now huh Satoshi?
Back in December of 2017, bitcoin was almost touching $20,000 but at the time of writing, it is floating around in the $3,000s range. So…did you get the point? Bitcoin is a digital currency but has a lot of issues and negative elements associated with owing to the lack of regulatory frameworks, part of the reason why no government has accepted it across the globe officially.
This was your quick guide to the whole bitcoin situation. Next time someone asks you, hey do you know what bitcoin is, just tell them that, wait…just give them the link to this article.