Bitcoins , an alternative economical system?
The bitcoin is the latest trend in what concerns payment systems. It started to appear in 2008, and was invented by Satoshi Nakamoto. The greatest aspect regarding bitcoins is that it consists in “informatics money”; this means that anyone who wants bitcoins simply needs a peer to peer system, without any intermediary. It started with the first transfer, when Hal Finney, a programmer, downloaded the bitcoin software and received 10 bitcoins from Nakamoto, up until the continuous growth that we see nowadays with the transaction of millions of bitcoins. So, this makes the bitcoin as a virtual currency, so, does it hold any type of value in today’s economy?
While there’s still plenty of uncertainty regarding the bitcoins, the popularity of the same has grown. One can obtain bitcoins by “mining”, in which user can use the most of their informatics knowledge to record their payments into public ledger. Bitcoins can also be obtained via trade with other currency and in transactions of goods and services. Since the transaction fees are lower than the traditional models, no wonder the popularity of this currency keeps increasing. There’s a drawback in this system, the users of bitcoins are not protected by refund rights.
Circulation and savings
The advantage of mining is that by recording the payment, in the case of success, the reward is new bitcoins and transaction fees, which mean that each transfer will imply the creation of more “money”. Since we’re talking about electronic money, how can we keep it? Using a simple wallet of course! Well, it’s not a simple wallet, it’s a piece of hardware especially designed to transact bitcoins with two cryptographic keys, a public and a private one. There’s the possibility of using several types of wallets, the software wallets have a connection with the network, allowing transactions while holding the identity, online wallets are the same than the software ones, but more intuitive, there’s also the physical wallets, which are safer, since they are off the network.
This is the biggest issue regarding bitcoins, like every digital system with connection to a network, it presents several exploits, and it keeps happening, although the transfers require identification, artificial bitcoins keep getting created. This problem is difficult to be bypassed since there’s also the problem of privacy. Users cannot be identified and have their data in public, since the users are not identified by name, but by other identification means, this leads to several potential menaces, although the security systems are getting more complex.
There’s one sentence that says that “money are simply number in a computer”, bitcoins take that sentence literally, not only numbers, but they are also virtual memory, which makes it a reliable system. In 2013, the first bitcoin ATM was installed in Vancouver, Canada. With the evolution of the system, in the beginning of this year, the first regulated bitcoin exchange was created; it will allow controlling the inflation of this system.
The inflation is expected to happen, in our system, that mechanism is controlled, since for each coin, there must be an equivalent in goods, while with a bitcoin; it’s only needed to have “virtual” space. Australia uses bitcoins frequently in the daily routines, China placed several restrictions in the use of bitcoins, and European Union is waiting for a regulatory regime before handling this currency and the United States of America are giving a step towards a normal use of bitcoins, with the approval of several regulations.
Bitcoins are hard to earn, limited in supply since they depend on verified transactions, the price of each bitcoin keeps increasing in a logarithmic scale, since it’s required to implement measures so that there won’t be an unbalanced growth. Nowadays each bitcoin is worth around 200 dollars. This system is already used by over 100 000 merchants, which makes it a successful system.