The other in my E-Commerce graduate class, we were briefly introduced to Bitcoins, digital currencies, cryptocurrencies and the community it survives on and its future! I am sure many of you might be wondering what these are? I thought it would be an interesting topic to write briefly on, as far as my knowledge goes and what I have read in the past few days and what I think about it currently? Hence, written by an amateur for amateurs, so to speak who have not heard of the terms!
Imagine sometime in the future, if there is a market of buyers and sellers who deal with digital currencies, which can be further used by all those in that community to purchase and sell things! That means no paper currencies and no middle-men really. What happens today is that if one wants to buy something, one goes to the market and pays either through a credit card/debit card or cash, which are all legitimate modes of payment. It is also worthy to note that not all countries have the same use of credit cards and debit cards as it in the United States, there are many countries who even today depend on cash heavily at several point of sales which are again also changing fast. But I would keep my discussion limited to the United States. So buyers and sellers, exchanging goods and services digitally without the need for middle-men, who would otherwise take a fraction of the price, which would make the goods or services more expensive for the sellers, who would eventually pass the burden onto the buyers, hence the vicious cycle carries on. This is exactly what the cryptocurrencies do! There is a community online in the virtual world as we know it, who deal with these cryptocurrencies today. So the future is already here!
The most popular cryptocurrency which is in circulation today, being mined as we speak! It was introduced as free from any central authority which means that it does not come from any government neither does it have any one or body of owners, hence meaning it is not a legal tender, but transferable electronically and instantly, with very low transaction fees. These facts themselves are mind-boggling to know!! Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet.
What’s a transaction in Bitcoin?
It’s interesting to find out what is a transaction in Bitcoin? That simply means that a value has been transferred electronically between bitcoin wallets, which is also included in the blockchain. It is also now relevant to find out what’s a blockchain? An open distributed ledger which records all transactions between two parties very efficiently, verifiably and permanently as explained according to Wikipedia. The creation of blockchain was done specifically for the bitcoins back in 2008 by a Sakashi Nakamoto. A fun fact is that the real identity of the inventor itself is a mystery and there are several debates over the true identity of the inventor.
I am sure by now, after additional reading on the topic of bitcoins, cryptocurrencies, several will be doubting the credibility itself of the new digital currency as I have since I was first introduced to the concept. If it’s not a legal tender in the first place, how and why will people be accepting this form of payment? Then why is there a rather fast-growing market for it? If the so-called community of cryptocurrencies can not be gratified presently with any goods or services, then why will people still see it as a valuable asset and invest more and more in this specific system? Many of the answers to the questions asked above are quite simply put as our professor said, “there are the believers!” This has to make up for something substantial since the growth of the believers has certainly been increasing at a phenomenal rate over the years and the conversations around the cryptocurrencies have also been gaining more and more conversations online and in the traditional markets all over the planet.
Conclusively, the future of these digital currencies will certainly have to watched closely or one will miss out on a growth opportunity from right under ones nose!