In the event you’re not familiar with Bitcoin, here is a quick refresher on the cryptocurrency that has been dominating the news cycle over the last few months. Everyone has a strong opinion on it, from celebrity investors to famous actors and musicians.
What is Bitcoin? Not everyone in the crypto community describes it as a “currency,” per se, some refer to it as an unconventional new asset. Other refer to it as the “internet of money.”
Technically speaking, Bitcoin is a peer-to-peer form of digital money, where users can send payments to one another without the purview of a central authority. In essence, Bitcoin is a protocol that delivers data (the Bitcoin’s themselves, which have monetary value) to other users in pre-determined quantities.
Transactions are completed, verified, and authenticated on the “blockchain,” the algorithmic formula visible for all on Bitcoin’s totally transparent public ledger.
A key characteristic of Bitcoin and the blockchain is that as we mentioned, it is controlled by no central authority; no bank, treasury department, or country has power over Bitcoin. It is a genuinely democratized and borderless means of exchange, made possible by millions of users across the internet.
Another feature of Bitcoin’s lack of central authority is the anonymity it gives its users; users do not have to provide their names, social insurance numbers, addresses, or any of the other traditional information associated with banks and credit cards.
What then, is the value of Bitcoin based on? While you could write a book (or two) on this question, the short answer is just merely the basic tenets of supply and demand.
Bitcoin is exploding in popularity and value, and with Wall Street starting to dip its fingers into the world of cryptocurrency, it’s likely a phenomenon that’s here to stay.