By Perkriti Malhotra
A bitcoin documentary film called The Rise and Rise of Bitcoin made its debut at the Tribeca Film Festival in New York on 23 April 2014, chronicling its origins to its explosive growth in 2013.
Undergraduate students at the Massachusetts Institute of Technology (MIT) received $100 in bitcoins to better understand this emerging technology. A student had the idea of a Bitcoin Club and raised more than half a million dollars from a MIT alum working in high-frequency trading.
All this has been news for a while now. But ever wondered what Bitcoin actually is? Well, if you wished that there was a currency system without any banks and that allowed you to make payments anonymously, then Bitcoin is what defines it.
- What exactly is Bitcoin?
Bitcoin is a software-based online payment system described by Satoshi Nakamoto in 2008 and introduced as open-source software in 2009. Payments are recorded in a public ledger using its own unit of account, which is also called bitcoin. Bitcoin is the first fully implemented decentralized crypto-currency, also the largest in terms of market value. There is no authority to regulate the exchange of bitcoins and it works in a peer to peer system.
- How does Bitcoin work?
Bitcoins are stored in a digital wallet, which exists either in the cloud or on a users computer or mobile. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money.
Bitcoins exchange works just like a normal foreign currency exchange. Bitcoins can be purchased and sold using different types of currency from an exchange called the Bitcoin exchange. Mt. Gox is the largest Bitcoin exchange. Another way to acquire bitcoins is from your peers using mobile or computer, which is similar to sending cash digitally. Yet another way is the mining of bitcoins, which is the process of creating bitcoins using complex mathematical problems.
- Why use Bitcoin?
Growing number of businesses now accept bitcoins, ranging from some Subway sandwich shops to Richard Branson’s commercial space travel venture, Virgin Galactic. Bitcoins as a form of currency do not belong to any country, so they can be easily and conveniently used in case of international transactions. Yet another reason for its use is the anonymity of transactions.Moreover, if you think that investing in gold is a good idea, then there bitcoin is yet another investment for you. Price of a bitcoin has risen up to levels as high as $1250.
Critical Analysis
Investment in bitcoin is highly speculative and should not form a major part of your portfolio. It is extremely volatile, subject to prices falling to half its rate within 24 hours.While for proponents of bitcoins maintain anonymity looks like a good option, the opponents feel that bitcoin does not provide a system to trace back the transactions of any transfer and sale or purchase, leading to illicit activities and trading of drugs.Since it is not regulated by any government, difficulty of taxation is yet another criticism.
Whether it becomes a widely acceptable form of currency or not but the fact is bitcoins surely have initiated some debates, discussions and controversy and got everyone thinking about them. They have acquired the much needed popularity in the exchange space. Now, we need to look and examine if the rise and the rise of Bitcoins shall continue in the near future because the future of bitcoins is as speculative as it nature.
Perkriti Malhotra is a student of Commerce at Shri Ram College of Commerce, Delhi University. As a co-founder of a Start-Up Society and an editor of the College magazine, she loves coming up with new creative ideas. She writes about anything and everything that catches her eye. Community service is something she finds solace in. She is a passionate tennis lover and Roger Federer is someone who inspires her. A foodie, she loves to try out new places to eat. She spends her leisure time baking cupcakes and brownies and searching for new and interesting ideas on the Internet.