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Technology Trends – CryptoCurrency

Cryptocurrency on laptop

Bitcoin, and other so-called cryptocurrency have been the subject of much recent news—largely due to the dramatic, and potentially, unsustainable increase in price. Although this new form of currency has many investors and speculators excited, savvy business owners should be wary.

Many of you reading this are probably asking yourselves a similar question: what is Bitcoin? Bitcoin is what is known as cryptocurrency. The concept is a relatively simple one, but the practical implementation is anything but. Essentially, the idea behind cryptocurrency is that it provides an anonymous method of payment for digital transactions.

Computers generate Bitcoin by solving complex mathematical equations, a process called mining, by performing billions of these calculations. In the early days of Bitcoin, it was relatively simple to mine, but as more and more people started mining, and usage expanded, it takes longer and longer to mine.

The algorithmic calculations used to generate Bitcoins become increasing complex as more Bitcoins are mined. Bitcoins are stored in a wallet—a 26-35 character token that contains the value of your Bitcoins.  The wallet is protected by a password generated by the owner.  Utilizing the wallet and the password, the bitcoin value is accessible.  Transactions can occur anonymously because transactions don’t revolve around accounts or systems that tie you to a particular wallet.

The value of the bitcoin isn’t stored at any particular institution such as a bank.

The anonymity built into Bitcoin was the chief aspect of the cryptocurrency.   This has many regulators and members of law enforcement worried. By allowing online transactions to be entirely anonymous, this line of reasoning holds, facilitates illegal activity. Although this may be an unpreventable consequence of Bitcoin, its proponents argue that this is merely a byproduct of cryptocurrency, much the same way that physical currency can be used for illegal activity.

Recently however, new concerns have risen concerning cryptocurrency, and Bitcoin specifically- runaway speculation. The value of Bitcoin has risen tremendously in its short history. In July of 2010, one Bitcoin was worth approximately $0.08. On December 15th, 2017, one Bitcoin was worth $17,500. As of this article’s writing, the value is over $56,000, however it has swung tens of thousands of dollars in as little as a month. This seemingly runaway speculation has many of the hallmarks of the DotCom Bubble of the 1990s.

If you are interested in learning more about Bitcoin or cryptocurrency in general, the potential for investment, and what can be purchased with cryptocurrency—it is exceedingly important to be informed. Bitcoin and other cryptocurrency is still in its infancy; the savvy business owner would do well to make an informed, and cautious decision about whether to begin investing in or accepting Bitcoin.

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