Bitcoin and the Hype

This un-regulated , open sourced  and virtual currency(BTC) has gathered a lot hype. With the estimated worth of $10 Billion, there are plans to install Bitcoin ATMs into the real world. One of the most valuable currency at around $950 per BTC, the concerns over its stability are rising. Without going further, it is essential to know what actually is a Bitcoin. Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by pseudonymous developer Satoshi Nakamoto. What has made it so popular is the number of advantages that bitoins carry.

  • bitcoins are transferred from person to person, that is no need to use banks as intermediary.

  • As a result, the transaction fees ( like that of Paypal or Banks ) is very minimal.

  • Transferred immediately, free from government rules and open sourced

  • The same currency (BTC) can be used in various countries to buy and sell goods. No need to exchange the currency.

  • Can use Mobile Phones, tablets to transact.

  • Since everything is virtual, BTC cannot be frozen in a bank.

  • Convenience Winking smile

Just like the government make more money by printing more the  mints, BTC are mined just like Gold or Silver. Every BTC comes with a unique mined code. Just like the Gold, the number of bitcoins are finite, 21 Millions.  To keep the bitcoins, you need a digital wallet.  But how would you use your bitcoins  ? To know this, follow these steps :

Lets say you want to purchase a laptop having a price tag of 0.0025 BTC. You will scan the barcode of the seller from the application installed in your phone and 0.0025BTC will be transferred from your account to the seller’s. Unlike the credit or the debit card, BTC successfully omits the Banks.

Germany has became the first country to gave its official stamp of approval and with the increasing number of shops accepting the BTC, the future seems to be very bright.  While those in favor of the BTC say it’s like the internet boom in the 1990s where the adoption was very low, but gradually, the internet became indispensable. This chart shows how BTC which was once 1 USD has now risen to approximately 950USD. Yes, BTC/USD = 950 ( 1 BTC = 950 USD ) . Think of the investors who once invested a little amount and are now millionaires . Perhaps, the first Billionaires  would be the Winklevoss twins ( Facebook Fame) who allegedly hold 1% of the total BTC in circulation.  Not just this, hundreds of companies have emerged based on Bitcoin and dozens of VCs ready to pour money into this currency.

However, with growing concerns of security and risks, the Bitcoin still remains niche. Countries like India have already put the advisory that will slump the growth rate of Bitcoins, the market is closely watching the moves. The Reserve Bank of India’s advisory on Dec. 24 prompted some Indian bitcoin traders to suspend their operations, even as regulators seek clarity on digital currencies and ways to regulate them. The RBI’s worries include taxation, security risks, losses due to the volatility and money laundering. The risks are huge and the security is minimum.

Some say that the Bitcoin is a Bubble that will burst but according to me, it won’t. It can’t fall to zero but gradually  come down. If you have seen the Bitcoin Chart carefully, you will see that the price has fallen generally after rising to its maximum .  There can be many reasons for this fall, but , this means that the more people are selling Bitcoins than buying it and after some time, the prices will settle down just like any other currency with much less volatility.

Another disadvantage comes in the form of regulations in countries like India & China. These affect the prices of the BTC to a great extent. However, as the Bitcoin is still in the developing stage, any news is a good news and helps in making increasing consciousness of Bitcoin among people. The Silk Road news has done the same with the Bitcoin.

But one of the major disadvantage comes from the very essential element that makes it, the open – sourced and algorithm based. What if in near future someone comes with a better algorithm of a digital currency and challenge Bitcoin. The market and the entire industry surrounding Bitcoin will fall .

What to expect from Bitcoin in 2014

We all agree that 2014 will decide the fate of the Bitcoin. Here are some of the predictions about Bitcoin for 2014.

  1. A large number of start-ups based on Bitcoins

  2. A similar currency will arise like Bitcoin on some different algorithm.

  3. More stability in the prices.