The cryptocurrency Bitcoin has jumped to a price of over $10,000. This year’s price growth has been exponential, beginning the year at around $1,000 (it was less than $1 in 2013). Some analysts predict it could continue rising up to $40,000, while others dismiss the whole thing as a fad. However, an increasing number of merchants are accepting it as an option for payment.
What is bitcoin?
Bitcoin is a digital asset used as currency invented and released as open source in 2009 by a person or organization named “Satoshi Nakamoto.” No one knows for sure who or what Nakamoto is, and people have speculated for years as to the true identity behind the creator of Bitcoin.
The main principle behind bitcoin is that it is decentralized, meaning that there is no central authority controlling the currency. This therefore differs from fiat currency, which is controlled and backed by sovereign governments. Since bitcoin is decentralized, it uses cryptographic principles to store transactions in a blockchain. The blockchain records all transactions openly in blocks, linking each one to the previous one through a cryptographic hash. Thus, the transactions are immutable; once recorded, they cannot be altered. Blockchain technology is useful for many applications where records must be stored securely, including for general financial data and so-called “smart contracts.”
In addition, bitcoin is anonymous, with holders of the currency identified not by name, but rather by bitcoin addresses which can be generated uniquely for each transaction, if desired. This makes bitcoin take on the anonymity aspects of cash. It is also fungible, such that each bitcoin is technically equivalent. Bitcoin can be purchased and accessed through a number of available wallet systems.
Will bitcoin continue to gain market acceptance and grow in price? Or, will the bubble eventually pop and the price fall out? No one knows for sure, but judging by the price increases this year, many people are betting that it will continue to grow.