On October 31st, 2008, days after the Lehman Brothers filed for bankruptcy and caused shockwave around the financial world while an alias named Satoshi Nakamoto laid out a whitepaper of a virtual cryptocurrency. Nine years later, that same cryptocurrency has become virtual gold, that is if gold were more expensive and safer to carry around.
Bitcoin, the most famous cryptocurrency out there now has been nothing less than a revolution. Virtual currency refers to the money that one can't touch or see. Cryptocurrency relates to a system where all parties associated with transactions remain anonymous. Unlike regular currency, no govt. Or central bank has any control over it, an entirely decentralised currency. One can trade/exchange/send bitcoins without requiring any permission or paying transaction fees to banks.
In November 2011, a bitcoin was worth 2 USD, in November 2013 it was worth 2,000 USD. In November 2017 its shattering all its previous records. Already past 7,000 USD and still going up every day. As of November 1st, 2017, a bitcoin is worth more than 600,000 BDT.
The recent surge in price has been explained by the increase in demand for bitcoin. What makes bitcoin unique from other currencies is that how tightly its supply is maintained. The amount of bitcoi n has been adjusted periodically. Hypothetically, the last bitcoin will be created in the year 2140. There is no centralized ledger of transactions. The complicated process which is used to keep accounting is called mining, and people who do it are called miners.
Market experts have warned everyone about the volatility of the market and predicted a marked adjustment is evident. Some have referred to this as cryptocurrency bubble. How can one use this? Well pretty much anywhere on the internet. Though it started with online bas ed platforms at first, now a significant number of companies and banks accept bitcoins as a standard of payment. Imagine buying a Lamborghini not with a bank account, but rather bitcoin wallet.
However, this comes at a price, many illegal online marketplaces have been able to get away with their activities due to the cryptic nature of bitcoin. While Silk Road was an example o f such markets, drugs or even weapons can be purchased via bitcoins in the darkest part of on the internet. A famous example would Wikileaks, who accepted donations via bitcoins to protect the anonymity of those who donated to its cause.
The issue has been the subject to heated debates with economists and leading tech experts on both sides. Famous economist Paul Krugman, renowned investor and businessman Warren Buffett and J.P.Morgan’s CEO James Dimon have expressed their skepticism. Tech Mughals such as Bill Gates and Steve Wozniak acknowledged its impact. Bitcoin or other cryptocurrencies might stumble on to challenges in their path. But even if these specific currencies fade away, the idea of such universal decentralized virtual currency is something that’s here to stay for a very long time.
(The writer is currently studying Economics at University of Dhaka. He can be reached at [email protected])
