Bitcoin Mania: the Cryptocurrency Explained

9 Jan

Bitcoin is a cryptocurrency, founded in 2009 by Satoshi Nakamoto. It is an entirely digital form of currency. Unlike physical currency, you cannot carry it around in your wallet.

Believe it or not, Bitcoin has established itself to a point where you can now buy groceries and clothing with it, just as you would with local currency. Alas, it is not widely accepted in most countries across the globe, only a select few.

Even after 8 years in circulation, Bitcoin is still a widely debated and rather controversial cryptocurrency which is completely divorced from governments and central banks. Managed by an online programme known as Blockchain, it keeps a well-managed online ledger of all digital transactions which take place.

Every time someone buys or sells Bitcoin, the transaction is lodged. Several hundred of these transactions are then logged as blocks. Blocks are not physically controlled by anyone as they are dispersed across all PCs throughout the globe. Only you can control your block via your very own Bitcoin wallet, which you get by purchasing Bitcoins.

Bitcoin set to skyrocket

Some experts believe this decentralised form of cryptocurrency will become highly popular in the next few years. This is due to the fact that it’s a quicker, cheaper and more reliable form of payment when compared to local currency which is highly affected by inflation and government regulation.

Additionally, there are a finite number of Bitcoins in circulation across the globe: 21 million to be exact. Every four years, a new number of Bitcoins is released, this amount is generally half of what was released in the previous cycle. As a result, the number of Bitcoins in circulation will approach 21 million, but never quite hit it.

Ultimately, this means Bitcoin will never experience inflation due to its finite amount. This however, worries critics as its popularity rises and the lack of availability becomes apparent in the future. This also means that a hack on the cryptocurrency could have catastrophic consequences for completely wiping out Bitcoin wallets, with a complete lack of reimbursement for money invested.

Can Bitcoin be hacked?

Instances of Bitcoin hacking have already taken place via Bitcoin exchanges. The actual value of Bitcoin cannot be manipulated or altered thanks to the nature of digital mining and Bitcoin’s cryptographic functions. However, experts explain it is possible to hack the networks and storage ‘locations’ of Bitcoin stores.

Hackers have taken to a popular cryptocurrency mining site known as Coinhive to access Bitcoin accounts and transactions.

Hacking concerns are also compounded by the fact that Bitcoin is not protected by government authorities or central banks. Due to the fact that Bitcoin is entirely digital, there is no sound security backing by any of these authorities.

This means that if your Bitcoin investment is hacked, there will very little chance of recovering your investments or claiming for your losses, unlike data when it is securely encrypted and backed-up regularly when stored in the Cloud!

Bitcoin has experienced a frenzy of growth in recent years, but none more so than 2017 with a 935% growth recorded in late November. With recent volatile fluctuations in performance, just how reliable is Bitcoin as a future form of currency? Watch this space!

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