Anyone under the age of 21 has probably heard of the word “bitcoin.” It has recently become a buzzword among young people into money management and the wonder of older generations due to the mystery, risks, and possibilities surrounding it. But what is it, really?
Bitcoin, to define it simply, is a currency. What makes it slightly complicated however, is that it’s a cryptocurrency; meaning there is no equivalent print money or minted coins for it. It makes buying things online cheaper as it is not subject to any taxes, but this also means there is no governing body that regulates it, such as how the Bangko Sentral ng Pilipinas (BSP) regulates the circulation of Philippine Peso. The BSP can only accredit the exchange platforms but not fully monitor transactions like in our local banks. Bitcoin uses an encrypted, mathematical blockchain model to track exchange of value and ownership, thus eliminating the “middle man” that trumps up additional or even hidden charges.
Value of Bitcoins
This makes bitcoin sound abstract, non-existent even, but of as of October 3 this year, 1 single unit of bitcoin is worth $6,415.01USD, or a whopping PHP 347,757.69. It has also been reported that a total of $24.16M were converted to our currency, while $36.74M were converted from peso to bitcoin, proving that this type of transaction is steadily on the rise.
An anonymous entity named Satoshi Nakamoto developed Bitcoin and made it available to the public in 2009, with the goal to create a cash system without mediations (banks) or central authority (World Bank).
Hold on to your purses and digital wallets, however, because bitcoin is not as easy to earn or even keep. For full-time Bitcoin miners, the process includes using powerful computers that solve mathematical problems that get progressively harder. Every time a problem is solved, one “block” of Bitcoin gets processed and mined. The miners then transfer these to their digital wallets which can be made anonymous for their own security.
For most of us however, earning Bitcoin can be as easy as accepting them as means for payment for goods or services. This is how students or fresh graduates can start investing in this cryptocurrency. Bitcoin wallet applications are readily available at app stores where you can accumulate and keep track of your digital money. If you’re working on part-time jobs online, you can start growing your bitcoin wallet by requesting it as payment instead of the usual currency. From here, you can lend them out to earn interest or trade, or simply let it sit and hopefully see the value grow. You can also buy Bitcoin with your own money to pay for goods and services, as the number of merchants that accept Bitcoins as payment is steadily growing.
Volatility of bitcoin
Bitcoin is a recent “invention” that has attracted millions of people because of it’s worth. However, it has also lost people millions worth because it is of its volatility and deregulated feature. Around 850,000 Bitcoins got lost when Japan-based bitcoin trader Mt. Gox (the cryptocurrency equivalent of Wall Street) went offline in 2014. Because of the anonymous feature of the currency, no one was held responsible. In 2016, bitcoins worth of millions of US dollars were also stolen when cryptocurrency trading platform Bitfinex was hacked.
It’s onlybeen less than ten years since Bitcoin was introduced to the world, but it has proven to become a powerful currency that continues to grow and mature. Due to its steady (but highly volatile) growth, it is also considered as a way to invest one’s money. It is definitely worth keeping tabs on or even invested on as early as one can, because a day may come where almost all online transactions only use this currency—just keep in mind proper money management. Learning all the risks and potential of bitcoin is vital for the present and future generations.