The money you’ve been using all your life is backed by a government of some sort, and it exists in a tangible way. Bitcoin is neither tangible nor backed by anyone, but it’s still worth a great deal to some people. This digital currency began circulating on the internet in 2009 with each Bitcoin worth just a tiny bit of “real” money, but right now a single Bitcoin is worth more than $2,000. Bitcoin is fascinating from a technological standpoint, but it’s also fueling online crime and violence because of the anonymity it offers. Here’s how Bitcoin works and why you should care.
What does Bitcoin mean for the economy?
Despite all these issues, Bitcoin is surging in part because more people are using it. Bitcoin fans believe steadfastly that it’s the future. Regular people are becoming interested in crypto-currencies, but it’s still too complicated for mainstream adoption. If that ever happens, we could see a lot more highs and lows in the global economy as Bitcoin’s value swings. And it does… a lot.
The value of one Bitcoin over the last few years.
Wanna be a millionaire it was easy back then and would have required an investment of just $1,000 i.e.
If you’d bought $1,000 of Bitcoin in 2010, you’d be worth $35 million right now. However, if you bought $1,000 worth of Bitcoin in early 2014, you’d have only had a quarter as much buying power a year later. Imagine being paid in Bitcoin, and then finding your money was only worth half as much a few days later. Economies with that kind of inflation are not stable, but Bitcoin has the advantage of operating alongside regular government-backed money. Almost no one has all their assets in Bitcoin.
Is Bitcoin going to last?
As a backdrop to all this, programmers are arguing over how best to manage Bitcoin going forward. There are calls to “hard fork” the currency, which could lead to two competing standards. That would cause even wilder swings in price. Whatever the long term ramifications of these decisions, Bitcoin (or whatever cryptocurrency it becomes) isn’t going anywhere.
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