Cryptocurrencies——Bitcoin in recent years

by YIMING WU

Cryptocurrencies is an encrypted decentralized digital currency which can transfer from one to another by the confirmation of a public ledger. The most famous cryptocurrencies must be bitcoins. First, let’s see how bitcoin works.

Value of bitcoin vs gold

Bitcoins do not have gold or government-backing these numbers. It is just people believe these numbers worth something. When people transfer money to another, one’s account just goes down by a certain number and meanwhile the receiver’s account goes up by the certain number. When the transaction happens, we need to confirm the sender is the guy who own the bitcoin account. So there exists a digital signature. The digital signature is created by the true account owner and the signature is encrypted by a key which only the account owner owns. As the signature is math-based, it is unable to reuse in any other transactions. This technique ensures the security of the bitcoins transactions. During the transactions, we need a computer to work out the math problems. So there exists some public ledgers. These public ledgers are from everywhere in the world and share their computer to work out the math problem during the confirmation process. This process is known as mining and the people who own the mining machines are called miners. Miners can gain bitcoins from the system by mining.

As the value bitcoin is going up day by day. Lots of people join the family of miners. The picture in the right shows how the value of bitcoin changes vs gold. In 2017, the value of bitcoin increases rapidly compared to 2016. The tables below show how the exchange rate of bitcoins goes up in 2016 and 2017.

BITCOIN EXCHANGE RATE OF 2016
Month Value(in USD)
Jan 434.4270
Feb 372.8680
Mar 424.4850
Apr 416.7540
May 452.5920
Jun 539.1680
Jul 677.7100
Aug 517.1349
Sep 571.5900
Oct 614.0599
Nov 729.2050
Dec 753.0550
BITCOIN EXCHANGE RATE OF 2017
Month Value(in USD)
Jan 1019.1988
Feb 986.5729
Mar 1262.0810
Apr 1085.2530
May 1442.2450
Jun 2436.0363
Jul 2439.8206
Aug 2737.7638
Sep 4863.1930
Oct 4383.3255
Nov N/A
Dec N/A
Price change of ASUS GTX1060

Due to the rapid appreciation of bitcoin exchange rate, lots of people in China purchase graphics to mine. JingDong, one of the biggest online shopping website in China, received a large number of returned graphics this summer. People took advantage of the seven day no reason to return term to mine. They bought the graphics from JingDong and then mine with it for six days. After that, they return the graphics on the seventh day. In this way, people can gain free bitcoins by repeating this procedure. As this kind of malicious purchase harms the interest of JingDong and its customer, JingDong decided to stop the support for the seven day no reason to return to the high-end graphics which are able to mine efficiently. The picture in the right shows the price change of a graphic, ASUS DUAL-GTX1060-O3G, on JingDong this year. Usually the price of a graphic continuously goes down. However, the price goes up in June and the price maintains for a month before JingDong realized it. After JingDong cancel the seven day no reason to return for graphics, the price goes down gradually. The same price change happens to almost all the graphics which are equal or have higher performance than GTX1060.







Reference:
“Bitcoin Chart (BTC/USD).” CoinGecko, www.coingecko.com/en/chart/bitcoin/usd.
“How Does Cryptocurrency Work?” CryptoCurrency Facts, cryptocurrencyfacts.com/how-does-cryptocurrency-work-2/.
“Blockchain.” Investopedia, 18 Sept. 2017, www.investopedia.com/terms/b/blockchain.asp.
“ASUS GTX1060 Price Chart." Manmanbuy, http://tool.manmanbuy.com/historyLowest.aspx?url=https%3a%2f%2fitem.jd.com%2f3705638.html
Jingdong Cancel Mining Graphics for Seven Days No Reason to Return, www.wevetech.com/phone/2017/07/17/12863.html.
“Digital Signatures.” Guide | Digital Signatures, learnmeabitcoin.com/guide/digital_signatures.
Rouse, Margaret. “What Is Bitcoin Mining? - Definition from WhatIs.com.” WhatIs.com, whatis.techtarget.com/definition/Bitcoin-mining.
Durden, Tyler. “Bitcoin Nears Parity With Gold.” ZeroHedge, 6 Jan. 2013, www.zerohedge.com/news/2017-01-04/bitcoin-nears-parity-gold.


Author: Yiming Wu