Digital Currencies: Bitcoin Essays

It’s based on supply and demand. Because of this, there is the chance of hyperinflation making fiat money worthless. There is a story about the little boy who came home with a puppy and told his mother that it cost him $40,000. It was a very valuable puppy.

The mystery of what cryptocurrency really is and what the future holds for it is another trait of Bitcoin that resembles the buildup of the Tulip mania bubble. A sense of mystery was created from the colors being unknown for the tulips that were cross bred which assisted in pushing up the values of tulips. With the U.S Securities and Exchange Commission (SEC) and Commodity Futures Trade Commission (CFTC) taking opposing views on whether Bitcoin is a commodity or security, the air of mystery due to weak regulations has contributed to its price instability. It can be expected that the bubble will burst as Bitcoin will increase in the near future. When? That’s the million dollar question. As the Bitcoin market surges, it has attracted increased public attention and everyone wants a piece of the pie. As a result, the market value of Bitcoin increases exponentially. There are approximately 16 million bitcoins in circulation today from a total of 21 million. With 5 million or less left to be mined, it makes Bitcoin mining very competitive

All of this ties back into the original problem with pennies. Fiat currency cannot itself be worth more than the value it is given. It would make absolutely no sense to take a dollar worth of gold and make it into a 50 cent coin. If this was done, people would just use the coin as gold, not the 50 cent piece it was supposed to be. When the material fiat money is made out of is worth more than the government proclaimed value, the purpose of that currency has failed and it has turned back into commodity currency.

The Second Law of Thermodynamics (also called the Law of Entropy) states that, generally, the universe moves from order and structure to a state of disorder. What we witness around is staggering complexity. Complexity has found its way into economics too. Eric Beinhocker, the author of “The Origin of Wealth”, estimates that in New York City alone, there are some 10 billion SKUs, or distinct commodities, being traded in a day. This is why, when an invention as simple as bitcoins was created, it made the economy uneasy. Over the past years, there has been an increase in interst in the cryptocurrency system by financial institutions and governments. However, their position is typically stated by “I like blockchain but not bitcoin.”

Demand for bitcoin has grown in eight years to a market capitalization of more than $40 billion.

“Skeptics can’t cool blistering Bitcoin” (DATE), written by Nathaniel Popper of the New York Times develops an article giving many detail on the state of which bitcoin is at and how skeptics can’t burn out the prices bitcoins are reaching.

The most famous cryptocurrency, Bitcoin (BTC), has surpassed a $5k USD market value on October 12th. People who boarded the bandwagon early are now rejoicing on their fruitful intuition. After several years of unfulfilled promises, the cryptocurrency market has shown huge growth in the past couple of months.

Digital currency is an Internet-based means of exchange different from physical currency such as circulating printed paper currency and coins.[1] Digital currency allows for instant transactions and boundaryless transfer-of-ownership. Both virtual currencies and cryptocurrencies are types of digital currencies. Like traditional physical money these currencies may be used to buy physical goods and services. Additionally, this digital currency could also be restricted

In December 2013, after a series of governments’ legislation was passed, the price of Bitcoin crashed. While many hoped for a revival, the prices continued to plummet until they reached low of $200. In one short year, the price had fallen to one-sixth of its previous high (“Complete Bitcoin’s Price Chart”). This fall proved what many thought; Bitcoin was a hoax.

There are limited number of Bitcoins that will be entered into circulation; 2. A bit in Bitcoin terminology is a denomination of the currency just as a penny and a nickel are small denominations within U.S. currency; and 3. The currency is highly volatile and very risky. A better fit for this analysis would be a Ripple (XRP). Ripple is a real-time gross settlement system (Steemit, 2017). These systems allow the near-real time transfer of assets (primarily money) from one financial institution to another financial institution. Thus, it is basically a transfer of information from a sender to a receiver. Weather data that has been transformed into a usable forecast is also a transfer of information from the sender to the receiver, and both transmit digital assets of varying types. Weather information can definitely be a digital asset to a weather analytics company, and the IRS has declared digital currency to be an asset as well. There is less hype and risk surrounding XRP than Bitcoin. On September 26, 2017, the price of one XRP was listed as $0.187733. Price is different than value. Estimates of the real value of cryptocurrencies are difficult to determine at best, however one valuation estimated the real value of one XRP to be $17.52 (Steemit, 2017). This is just one estimate of the value of Ripple. Clearly, more analysis is needed to substantiate this valuation, but it is a starting point

     In the present day, the world's economy is ever-changing and adjusting. Many different reasons control the reasons for this. The future of currency is something that can only be predicted and is not guaranteed. However, there are many determing factors behind the changes that can take place. Asia and North America are two continents that have economies that have recently changed or are in the midst of change.

First, if it's still an international concept for you, cryptocurrency is any of a number of digital money that can be made use of for online deals without intermediaries such as financial institutions. Without financial institutions, cryptocurrency can be traded and made use of for business between 2 or even more individuals without the oversight-- as well as expense-- of those intermediaries.

Bitcoin has no value of its own contrary to what many argue. Its value is derived by the number of people adopting it and pouring their money into the BTC ecosystem. Investments by deep-pocketed investors like Winklevoss twins (estimated BTC stake around 11 million USD back in April), Chamath Palihapitiya, ex-Facebook executive and early employee, who has already dropped $5 million into BTCs and has plans to invest another $10 million are the reasons for skyrocketing price of bitcoins [3] [4]. Add to this, the publicity and trust in the system they are generating. Bitcoin's future potential was a hot topic this October at emTech, an MIT conference on emerging technologies [5]. Considering BTCs more as a start-up rather than a currency, its growth curve makes more sense but unlike a start-up it’s not generating any value itself but gaining people’s trust. And that’s what gives it value.

Nowadays, the Internet has implemented great impacts on people’s life, and it also has changed the business world significantly. In order for companies to cope up with the changing customer demands, they must adopt new technologies not only to support their business functions but also to reduce paper works, reduce costs, and provide better services. Bitcoin is a currency of the Internet, distributed, worldwide, decentralized digital money that be developed as a new payment method. In Australia, the regulator has defined Bitcoin as property instead of currency for accounting purposes (King, 2015 February). Although Bitcoins are not materially existed, it can be exchanged for goods and services at places that accept it, the same way you would give someone a dollar for a cookie.

It’s important to note that since Bitcoins are produced without the involvement of governments or banks, they avoid taxes. Lastly, the cap of 21 million bitcoins has driven the value of a single coin up as shown by the below graph depicting expected growth of coins over time.