The virtual currency that is Bitcoin is still a bit of an enigma for many people. You have probably heard a great deal about it, but you might not actually know anyone who actually has any of the Bitcoin units or really understand where you get them from – let alone know anyone who has actually used Bitcoin to buy anything.
Born at the height of the Global Financial Crisis, this is now the fifth year of Bitcoin’s existence in the world. In this article we take a look at whether Bitcoin is here to stay and what the future might hold for this unique currency.
On current estimates the value of the world’s Bitcoins currently in existence is now over the one billion US dollar mark. That is a huge amount of value considering that there is no central bank providing control or regulation for this digital currency. But commentators agree that we are seeing a Bitcoin bubble, that while the value is currently over one billion US dollars it is highly likely that there will be a correction at some point and the value will decrease.
At this stage the biggest users of Bitcoin seem to be either living in Hong Kong or Russia. Recent surveys also show that Bitcoin use is strong in those European countries that have not yet adopted the Euro currency. The United States is one of the countries with one of the lowest rates of usage of Bitcoin. One of the reasons for this is that Bitcoin seems to be an attractive option in those places that might require a hedge against inflation or a way of executing financial transactions over long distances. Those countries that have a stable banking system and well established systems for online payments are less likely to find Bitcoin immediately useful. There is also an age factor at play – people under 35 seem more likely to be attracted to Bitcoin because they are used to digitising everything else in their lives.
Designed by the mythical Satoshi Nakamoto, Bitcoins are the perfect digital currency. If you send Bitcoins to someone then you can’t get them back. Once someone send you Bitcoins, then they are yours – no questions asked. They are anonymous and secure – in many ways much cleaner than relying on the payment systems used by banks. This anonymity also makes them impossible for tax officials and law enforcement agencies to detect.
This completely decentralised, digital currency still appears to a certain extent to be a work in progress. In many ways it is the modern equivalent of gold – a precious resource that you can exchange for things of value – and while there is speculation, there will be a demand for Bitcoin. While the value of the Bitcoin units is perhaps still to be fully tested by the market, while there continues to be uncertainty in financial markets, a lack of trust in banking systems, and a need for reliable and secure online payments systems, then it seems that Bitcoin has a role to play in our financial futures.