Bitcoin is a digital currency that was created in January 2009. It follows the ideas set out in a whitepaper by the mysterious and pseudonymous Satoshi Nakamoto. The identity of the person or persons who created the technology is still a mystery. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and, unlike government-issued currencies, it is operated by a decentralized authority.
Bitcoin’s latest volatility has both skeptics and fans claiming their predictions are finally coming true. It’s like an online version of cash. You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether. However, some companies are beginning to buy into its growing influence. In October last year, for example, the online payment service, PayPal, announced that it would be allowing its customers to buy and sell Bitcoin.
In February, Bitcoin hit a new record high of $58,000 (€47,480). The price had fallen to just above $46,000. The drop followed a weekend in which Tesla CEO and Bitcoin fan Elon Musk tweeted skepticism at the coin’s seemingly unstoppable rally, saying he thought the cryptocurrency could be overvalued.
The buzz was enough to draw criticism from US Treasury Secretary Janet Yellen as well as billionaire and Microsoft co-founder Bill Gates. “My general thought would be that, if you have less money than Elon, you should probably watch out,” Gates told Bloomberg.
But Bitcoin believers have remained bullish. after 2 or 3 days, the coin had climbed again and was trading near $50,000. The latest activity has forecasters on both sides of the Bitcoin debate claiming their predictions are coming true.
Some people like the fact that Bitcoin is not controlled by the government or banks. People can also spend their Bitcoins fairly anonymously. Although all transactions are recorded, nobody would know which ‘account number’ was yours unless you told them. In an online chat with social media users in January 2021, the world’s richest man, Elon Musk, said he was a big supporter of Bitcoin. He even went as far as to change his Twitter bio to “#bitcoin”. He has repeatedly shown his support to online currencies in recent years and caused major movements in their values due to his own personal wealth and influence. This particular endorsement led to the value of Bitcoin to rise significantly.
Every transaction is recorded publicly so it’s very difficult to copy Bitcoins, make fake ones or spend ones you don’t own. It is possible to lose your Bitcoin wallet or delete your Bitcoins and lose them forever. There have also been thefts from websites that let you store your Bitcoins remotely.
The value of Bitcoins has gone up and down over the years since it was created in 2009 and some people don’t think it’s safe to turn your ‘real’ money into Bitcoins. This concern was expressed by the head of The Bank of England, Andrew Bailey, in October 2020. He said that he was “very nervous” about people using Bitcoin for payments pointing out that investors should realise its price is extremely volatile. By this, he meant that the value could drop significantly at any moment and investors could lose a lot of money.