Understanding Bitcoin And How They Can Affect Your Future

Understanding Bitcoin And How They Can Affect Your Future
Cryptocurrency has been regarded as the future of money around the world.
Together with technology, these virtual currencies are slowing changing the financial landscape. Many people are now getting into these types of virtual currencies. There are many types of cryptocurrency available today, yet the most popular is still Bitcoin, which is considered one of the oldest.

Many investors are now putting their hard-earned money into the cryptocurrency industry. This year, this virtual currency industry has already earned around $155 billion in market capitalization expected to grow in the coming days. With Bitcoin, it has risen to global prominence. It is the leading cryptocurrency and most expensive among all the virtual currencies.

Despite the traction, these digital currencies get, many are still sceptical. Even if there is a notable rise in cryptocurrencies, many avoid it because of the limited knowledge of how Bitcoin works.

What Is Bitcoin And How Does It Work?

Bitcoin is a digital currency created in 2009 though a pseudonymous person or persons who use the name, Satoshi Nakamoto. Up to these days, real creators of this digital currency remained a mystery. This virtual currency is operated in a decentralized authority and has no physical attributes or counterparts.

Bitcoin offers lower transaction fees when compared to traditional online payment mechanisms. It is not issued or backed by any bank, government, and established financial institutions. Bitcoin seemed to be an online version of cash, yet you cannot use it to all shops found on the internet to buy products and services. Some countries have even banned Bitcoin.

This digital currency is a computer file stored in a digital wallet that you can put on your phone or your computer. Since this is a virtual currency, you can easily send some Bitcoin to other people, and they can also send back to you quickly. These transactions are then listed on a public list called the blockchain.

Though transactions are noted on a public list, owners remain anonymous. No names, social security numbers, or tax IDs are needed to make any transactions. Instead, encryption keys are used to connect buyers and sellers.

There are three common ways to get Bitcoin. You can use your “real” money to buy Bitcoin, sell some of your things and make people pay you with Bitcoin instead, or mine Bitcoin using powerful computers.

The Risks of Bitcoin

Cryptocurrency, Bitcoin, in particular, has been gaining traction in the past years. However, not everything associated with Bitcoin is on the right side. Bitcoin is also linked with crimes like money laundering and narcotics sales. These crimes are prevalent on dark-web sites where most Bitcoin transactions are made. Since Bitcoin are decentralized and not governed by any banks or government rules, they also have a high level of volatility.
Understanding Bitcoin And How They Can Affect Your Future
While many are still leaning and investing in this virtual currency, there are many notable risks from this activity. One of which is that there is no guarantee if you will have a return of your investment. The value of Bitcoin continuously ripples back and forth, which makes it unpredictable. To avoid losing your hard-earned money, make small investments instead of pouring big ones that can be lost instantly.
Other risks of Bitcoin include:
Cybertheft – Bitcoin and other cryptocurrencies are stolen during exchanges and mining. Even if you have placed protection on your digital wallet, it can still be hacked by cybercriminals.
Financial Loss - Furthermore, if you misplaced or forgot your key, there is no way you can get your virtual currencies back.
Limited Use – Cryptocurrencies are still to be adopted in the mainstream market. Leaning on Bitcoin will give you limited use as only a few companies accept this type of currency these days.
Technology Dependent – Bitcoin is a virtual currency stored on cloud technology. It means that Bitcoin and other cryptocurrencies are reliant on technology. Without technology, it is worth nothing. Unlike virtual money you have in your bank account or payment channels, there is no physical collateral to back up Bitcoin.

Bitcoin And The Banking Industry

Despite its risks and crimes connected to Bitcoin, they still get tractions to many investors. In the banking industry, experts have noted that Bitcoin could potentially impact the central banking system. According to Bank International Settlement or BIS, they have observed that Bitcoin can affect the way they control the global economy and currency.
Understanding Bitcoin And How They Can Affect Your Future
As the days move forward, many expect that cryptocurrencies will be an integral part of the banking industry. Experts are eyeing these virtual currencies to improve traditional banking setups and enhance imperfection in the banking system. Since cryptocurrencies like Bitcoin are stored in the cloud technology, therefore it eradicates the need for intermediaries.

The Future Of Bitcoin

These days, many currencies are already electronic. Many consumers are already engaging in transactions without physical coins. From online banking to payment channels that do not have any physical attributes, trades are turning virtual in many industries.

One of the industries that Bitcoin is expected to thrive is in the remittance industry. International and digital transactions around the globe use virtual credit or currently to be able to transfer funds. Bitcoin comes in the same concept, making it possible to incorporate Bitcoin in this type of financial transaction.
Understanding Bitcoin And How They Can Affect Your Future
Another industry that Bitcoin may disrupt in the future is real estate. Buying or selling a house is a bit of a tiresome for many that involve many paper works. Bitcoin and cryptocurrency technology can simplify the process and speed up each transaction. Smart contracts can be executed, and payment over blockchain would become a breeze for many buyers and sellers.

While it is just the foresight of many financial experts, other industries that can expect potential effects include private transportation, cybersecurity, healthcare, supply chains, and even voting procedures. Industries have yet to realize the substantial role of Bitcoin and other virtual currencies in their framework, procedures, and policies.
Before you leave, also check out this article on how you can buy bitcoin anonymously with your credit card.

Final Thoughts

With the world going digital, Bitcoin is seen to bring changes to many industries aside from the banking institution. It can be noted that some enterprises have already started accepting Bitcoin as payments. While cryptocurrency is yet to become mainstream, it is still finding its way entirely to be approved by society. It is just a very young technology that has only been in the market for a decade. Bitcoin and other cryptocurrencies are yet to become stable in the financial industry. Depending on the evolution of the market, Bitcoin can either thrive or become useless in the future.   

Author's Bio

Maricar Morga

Maricar Morga
Maricar worked as a marketing professional for almost a decade and handled concerts, events and community service-related activities.

Leaving her corporate job for good to pursue her dreams, she has now ventured in the path of content writing and currently writes for Softvire Australia - the leading software e-Commerce company in Australia and Softvire New Zealand. A Harry Potter fan, she loves to watch animated series and movies during her spare time.
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