Bitcoin: What is it and Why is it important?

By David Sternheim

Throughout the world, each country uses its own form of currency. These currencies are all worth different amounts depending on the economic state of the country the currency is from. What if there was a currency that was universal? Universal in the sense that the currency can be used anywhere while still holding the same value. What if this currency also did not require any physical currency or "middle man" to distribute the currency? But wait there's more! How about if this currency was completely digital and has no physical representation? If this currency sounds good to you then in comes bitcoin - the first decentralized cryptocurrency! I know, I know you're probably thinking what in the world is this "decentralized cyrptocurrency" thing. All technical jargon aside, simply put bitcoin is digital currency that is not regualted by any government.

According to Nathaniel Popper of the New York Times, bitcoin is essentially a digital token that can be sent electronically from one user to another. That being said, there are major positives and negatives in using this type of currency. On one hand the decentralized nature of bitcoin allows business to ignore credit card fees and it ignores country regulations. The negative of that is the anonymity of bitcoin users, so it is the popular currency among criminals. Popper asserts that because there is no central authority, information on the users cannot be collected to a single agency.

If you are an optimist about the uses for this currency then you might be thinking to yourself, how do I get my hands on some of this wonderful currency? Well according to a CNN tech blog post you can get some of this currency through one of three methods: buy through a bitcoin exchange, transfer bitcoins between users, or mining bitcoins. Bitcoin exchange services enable people to buy and sell bitcoins using any type of currency. Mt.Gox is an example of an exchange service as it was the largest exchange service before its collapse. Transfers are simply one person transferring bitcoins to another person. Simply put, all a transfer is wiring money to another person. Lastly, there is something called mining. This is the most complex method of obtaining bitcoins because it requires the computers to process complex puzzles very quickly. Only the fastest computers are able to mine for bitcoins.

What is the worth of a bitcoin in USD? According to Julia Kollewe of The Guardian, the price of bitcoin has reached an all-time high of $5000. The cryptocurrency rose by more than 8%, having started the year at $966, Kollewe asserts. Given the anonymous nature of the currency, it is only natural for countries to try and regulate the trading by placing bans on the currency in an attempt to limit any financial problems the currency may incur. The result of these bans is the volatility of the bitcoin value.

Not everyone is basking in the glory of the bitcoin revolution. JP Morgan chief executive, Jamie Dimon, said bitcoin is a fraud that would ultimately blow up. He continues to assert that there is a limited market for the digital currency being that the primary users are criminals and people living in countries such as North Korea.

While bitcoins can seem to be an extremely risky investment, the idea behind a digital currency that supercedes country regulations and currency is perplexing at the very minimum. Just imagine the convience of everybody using the same currency. The bitcoin revolution could change the economy of the world. We'll just have to wait and see how the bitcoin revolution transforms the world.

bitcoins with cash in background bitcoin with computer background
Best Rated Bitcoin Exchange Services
Name of Company Score
iq option 9.85
coinbase 9.80
etoro 9.75
Bittrex 9.70
LocalBitcoins 9.55
Bitcoin Value Over 5 Year Span
Year Value(USD)
2013 $17.09
2014 $775.11
2015 $316.20
2016 $431.02
2017 $5627.23