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Bitcoin Briefing | Hannah Musgrave
Bitcoin Briefing
by Hannah Musgrave
Recently on social media, there has been an outburst of Bitcoin. Maybe you’ve heard that name before—it’s still a new system, created just in 2009—but what is “Bitcoin”? Although a confusing and complicated theorem, Bitcoin is essentially digital currency. In short, there are no physical bitcoins. All balances are kept in a cloud, similar to iCloud, and are then verified by a massive amount of computing power. Bitcoin users have digital wallets that they store their bitcoins in and send and receive money through. They can store their wallet either on the bitcoin cloud or a personal computer, but to be noted, there are major faults in both of these storage places. For example, with a wallet in the cloud, servers can be hacked and companies have fled with clients’ Bitcoins. With a wallet on a personal computer, you can accidentally delete them or viruses could destroy them.
There has been much criticism of Bitcoin as it gains more popularity and grows bigger. People have described losing thousands of dollars because they accidentally deleted a file, were hacked, or just couldn’t remember a password—huge consequences for such a common and little mistake. It’s a definite gamble in the Bitcoin world, and when you purchase and make transactions with bitcoins. Because Bitcoin allows users to make transactions anonymously, people can buy and sell anything without it being traced to them, making bitcoins the go-to currency for illegal activities (e.g. drugs). Governments also have concerns about taxation, since Bitcoin is currently unregulated by government. On top of all this, the whole cloud and system itself might—and probably will, according to some critics—fall through.
Critics who believe that the system itself will fail have several reasons to believe this. One, the leader and creator of Bitcoin is unknown and unreachable. In other words, there is no person to contact if something goes wrong, and moreover, there doesn’t seem there ever will be. Satoshi Nakamoto is the fake name of the creator of bitcoin, although no one knows his real name or whereabouts. According to listverse.com, the FBI has been searching for him for years and raided several suspected houses, but they have never been able to find anything or anyone. His identity still remains a mystery. Along with the mystery man, Bitcoin has a mystery future with no clear plan or goal.
The second big reason for doubt: Bitcoin is based on the creation of new bitcoins. According to Bitcoin’s FAQ, “New bitcoins are generated by a competitive and decentralized process called ‘mining’. This process involves that individuals are rewarded by the network for their services. Bitcoin miners are processing transactions and securing the network using specialized hardware and are collecting new bitcoins in exchange.” So when there are no new bitcoins being created, Bitcoin itself will cease to exist. No one knows exactly when or how this will happen or what will happen to people’s money then, but presumably it will all disappear with the fraudulent cloud in which it resides now.
In short, there may not be much of a backing or solid platform on which Bitcoin stands. It is based off of unsteady theorems and people. Take your own stand and invest at your own will, but it is worthy to take note of the gamble which Bitcoin is.
Sources:
CNN Tech. “What is Bitcoin?” Infographic.
Custodio, Nik. “Still Don’t Get Bitcoin? Here’s an Explanation even a Five-Year-Old Will Understand.” Coindesk. 9 Jan 2014.
Stark, Elena. “10 Reasons Why Bitcoin Will Fail.” Listverse. 23 Nov 2017.