Those watching current events are foretelling that bitcoin could play a pivotal role in the future economy. It is important to understand bitcoin's place in the world.
What Is Bitcoin?
Bitcoin is an Internet currency, which is part of the problem in understanding it. Created in 2009 by an unidentified person using an alias, bitcoin isn't a tangible item like a dollar bill or a quarter. Yet, it can be used to purchase items online from bicycles to personal services like haircuts. Buying such services depends on whether merchants accept bitcoin as payment.
You can save your bitcoins by storing them in the cloud or on a computer in a digital wallet. The wallet allows bitcoin owners to send or receive them and pay for services.
What Is Bitcoin Worth?
This is another dilemma facing people trying to understand bitcoin. Bitcoin isn't tied to banks like traditional money. With traditional money, governments and institutions such as the stock market the Federal Reserve control the value. Since bitcoin isn't tied to those institutions, the value of it is what people say it is. In other words, the value of bitcoin is tied to use rather than a governmental structure.
What Are the Advantages of Bitcoin?
Bitcoin can be used anonymously. They are easier to use and, in some respects, you get more for your money because bitcoin has no fees attached, unlike credit card merchants. Since bitcoin isn't under any government regulation, they can be easily used internationally without any additional governmental fees or loss in exchange rates.
However, the ease and anonymity also poses problems for law enforcement. Bitcoin has been used to pay for illegal dark web transactions, leaving investigators in a lurch in attempting to identify criminals initiating these payments. Also, since bitcoin isn't tied to banks, they aren't FDIC protected.
How Do You Get Bitcoins?
There are bitcoin exchanges where you can buy them, you can get them from others, or you can "mine" them solving complex games.
What Is the Future of Bitcoin?
There are a variety of opinions on bitcoins' future and it will be an issue for politics as it grows in mainstream use. One bitcoin started out worth less than a cent seven years ago, but now one is valued at $2,200. Some expect it to top $7,000 over the next four years while others expect a dramatic fall. It crashed in 2013, dropping 25 percent.
There is no doubt that President Donald Trump will play a role in bitcoin's future. Trump is expected to create a domino effect that will ultimately result in a higher demand for the virtual currency. Financial forecasters state Trump's spending increases will cause rapid economic growth and inflation. That will lead the Federal Reserve to implement hikes, raising the dollar's value. That will lead to those in countries like China and Russia to start using virtual currency rather than traditional banking systems.
This scenario will play into politics and current events, changing the financial landscape. That will keep the topic of bitcoins in the news for years.