Bitcoin is a digital currency, which aims to do away with all the problems we have paying for things online.
You may think the system we have is pretty good, but everything we buy today has to go through a bank or a credit card company. They take a cut of the transaction, and the whole systems relies on our trust that they will do everything right. Well, after a while, those payments really start to build up. Regulations are in place to try and keep these financial super powers in check, but no amount of regulation can solve the issue that we have when it comes to security. We are forced to trust these companies to keep our details safe, and they are doing an absolutely horrible job at it. 143 Million people alone had their information stolen by the Equifax breach in 2017.
The concept of a currency without a middle man isn’t a new one. Many people have tried to work out a payment system without that middle man for a long time. There are challenges that exist when trying to create this kind of system. How do you prove that you’ve paid for something? Or even that you have that money at all? Without someone like a middle man vouching for you. This is called the “Double Spending Problem.”
Then in 2008, right after Lehman Brothers & their friends went bankrupt a solution was presented by an anonymous programmer who went by the name of Satoshi Nakamoto. Still to this day, no one knows who Nakamoto actually is and we most likely never will. We know the group of people he was working with, but all of them have denied actually being Satoshi.
Nakamoto left a paper on a popular cryptography blog, which proposed a system of currency that solved all of these problems. His proposal was that instead of a bank or credit card company recording every transaction in one single ledger, all of the users would record all of the transactions at the same time. As a result, any attempt to fool the community would be noticed and the payment rejected.
No one user, government, or bank can force a fee on a payment, or control its flow.
The result is an easier, cheaper, quicker way to spend money, even across national borders. This is what Bitcoin really is, and it is already starting to have an impact on people’s lives all over the world.
Within months of its proposal, it was already being used to buy and sell goods. Although some sites like the Silk Road heavily relied on Bitcoin for the transaction of illegal goods and services, we can see that after many sites (including Silk Road) were shut down that Bitcoin is still alive and well today, topping over $19,000 last month. So it’s obvious now that these illegal trades only accounted for a small percentage of the bitcoin economy.
We know that it’s not all shady businesses.
Many shopping websites take it, there are restaurants all over the world that are now accepting Bitcoin and some are even using it to pay their college tuition.
But, as with anything there are problems. While some are profiting nicely from getting in early, others are loosing big because it’s such a volatile and young market. People are also founding companies to buy up lots of Bitcoin. Because it is designed to have a limited amount ever in circulation that might cause problems down the road.
There is so much uncertainty around Bitcoin.
Some people think this is genuinely the future. Others are terrified it could destroy the economy. But many from both sides agree that if we could get Bitcoin to work, or something like it, if we could trust a digital currency, without the middle man, then the way the world economy functions could be transformed for the better.