The price of bitcoin crossed $ 27,000 for the first time on Wednesday; as speculative digital currency surpassed its previous high reached shortly after going tradable on Wall Street three years ago this month.
Like other instruments used to store value in uncertain times; bitcoin has benefited from the pandemic which has pushed other commodities like gold, silver, and platinum to multi-year highs. Due to the structure of bitcoin, few coins are created and there is relative scarcity.
Here is a brief overview of bitcoin:
HOW BITCOINS WORK
Bitcoin is a digital currency that is not linked to a bank or government; and allows users to spend money anonymously. Coins are created by users who “mine” them by lending them computing power to verify other users’ transactions. They receive bitcoins in exchange. Coins can also be bought and sold on exchanges with US dollars and other currencies. Some companies also accept bitcoin, but its popularity has stagnated in recent years.
Bitcoin made its debut on Wall Street in December 2017; when bitcoin futures became tradable on the Chicago Mercantile Exchange and the Chicago Board of Trade. The fervor and interest in bitcoin as it approaches its commercial debut has pushed digital currency to record highs. The currency; which was worth less than $ 1,000 at the start of 2017, climbed to $ 19,783 by the end of the year.
But once trading began, Bitcoin futures fell sharply over the course of several months. A year later, the currency was worth less than $ 4,000. Investors and bitcoin enthusiasts at the time said the 2017 jump was largely caused by speculative interest and media attention.
HOW MUCH IS IT WORTH NOW?
A bitcoin is worth around $ 20,700, according to Coinbase; a major digital exchange bureau that also trades other tokens and currencies.
But the value of bitcoin is volatile and moves hundreds or even thousands of dollars over the course of a week. A month ago it was worth less than $ 17,000 and a year ago it was worth less than $ 7,000.
Bitcoin is a highly speculative investment and has not performed as well as more traditional forms of investing; such as stocks or bonds unless a buyer was in the currency years before it took hold. the top. For example; three years ago the Associated Press bought $ 100 worth of bitcoin to track the currency; and possibly build stories of how businesses were accepting it. That wallet didn’t get broken even this month.
WHY BITCOINS ARE POPULAR
Bitcoins are basically lines of computer code that are digitally signed every time they travel from owner to owner. Transactions can be done anonymously, making the currency popular with libertarians as well as tech enthusiasts, speculators and criminals.
Bitcoins must be stored in a digital wallet, either online through an exchange like Coinbase; or offline on a hard drive using specialized software. While the Bitcoin community knows how many bitcoins exist, where they are all located is a guess.
WHO USES BITCOIN?
Some companies have jumped on the Bitcoin bandwagon. Overstock.com accepts payments in bitcoin, for example.
The currency has become popular enough that more than 300,000 transactions typically occur in an average day; according to the Bitcoin wallet site blockchain.info. Still, its popularity is low compared to cash and credit cards; and most individuals and businesses don’t accept bitcoin for payments.
HOW ARE BITCOINS SECURE
The Bitcoin network operates by harnessing the greed of individuals for the collective good. A network of tech-savvy users called miners keeps the system honest by pouring their computing power into a blockchain; a global tally of every Bitcoin transaction. The blockchain prevents thieves from spending the same bitcoin twice; and miners are rewarded for their efforts by occasionally receiving bitcoin. As long as miners keep the blockchain safe, counterfeiting shouldn’t be a problem.
HOW BITCOIN CAME
In 2016, An Australian entrepreneur stepped forward and claimed to be the founder of bitcoin; only to say days later that he did not “have the courage” to publish proof that he is. No one has claimed credit for the currency since.
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