Updated: Mar 29, 2021
Bitcoin - sufficient to say is the talk of every town. Everyone has their own opinion about bitcoins – some want to invest in them, others don’t, while some others are not sure what bitcoins really are.
What is Bitcoin?
Bitcoins have been a topic of interest ever since they came into existence in 2009 but have raised so many questions ever since their prices surged up to 900% in the past year.
How did Bitcoin come into existence?
Bitcoin, a cryptocurrency, was first mined by an unknown programmer or a group of programmers under the pseudonym Satoshi Nakamoto. Bitcoins are completely virtual coins that can be self-contained for their value with no need for banks to store or move the money.
Bitcoin wallets are used to trade in bitcoins. Once you have installed a Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address and you can create more whenever you need one. Once you own bitcoins, they possess value and trade just as if they were nuggets of gold in your pocket.
How do they work?
Bitcoins can be used to buy goods and services online or to simply store them with yourselves in the hope that their prices rise. Bitcoins have also been used in all sorts of criminal activities ranging from thefts, ransomware to money laundering and Ponzi schemes. We certainly cannot question bitcoin’s potential.
Another interesting fact about Bitcoins is that they are self-limiting because only 21 million total bitcoins will ever be allowed to exist and they drop by half every 4 years until all are in circulation.
With the hype created for bitcoins, the prices of bitcoins managed to reach as high as $17,000. People who view bitcoins as a store of value’ are also responsible for driving up the demand and prices of bitcoins. However, many people also believe that the reason for the rise in prices is a result of market manipulation.
Is this a bubble? Will the bitcoin bubble burst?
Bitcoin is definitely a bubble. Bitcoins have all the trademarks of a bubble just like any other bubble in history. Intensive spike in prices in a short span of time, large media coverage, talk about the new era it might lead to – all point to one thing: The bitcoin bubble.
Surely, anyone who invested in bitcoin in 2009 is a millionaire by now, but that doesn’t mean that the prices will continue to rise forever. The bitcoin bubble will pop, but nobody knows when. So till then, sit back, buckle up and enjoy the ride.
Note : All the views expressed are author's personal views. No intention to harm anyone's point of view.