Bitcoin has been in exitance for nearly 10 years now and it has witnessed all extra ordinary ups and downs in all these years. There was a time back in 2017 when it recorded the highest ever price of $19783. Although the prices plunged back down by more than two third from its peak in response to the interference of regulators. Such swings in the prices of any currency instruments does not occur in the normal course of market.
More of that later, let us focus on understanding the concept of Bitcoin.
What is Bitcoin?
Bitcoin is a cryptocurrency developed on the platform of blockchain technology. Its founding developer is believed to be Satoshi Nakamoto in 2009, which is known to almost all interested folks. But, Bitcoin and its peers does not operate in the form of bills or coins published or regulated by a government or bank. They are electronic assets formed and checked by a community of users who act in a decentralized way. They follow the same set of protocols as laid down by the person or persons who dreamed them up including Satoshi Nakamoto. It’s so called Bitcoin miners use the encryption technique which is depicted by the term “crypto”.
Bitcoin’s real innovation indeed was the development of Blockchain technology which is the foundation of all new crypto currencies being developed till date (except a few). Blockchain is a publicly visible and largely anonymous online ledger that accounts the calculations performed by miners to authenticate the transactions without the need for a regulating central authority. One can buy or trade bitcoin and other altcoins at any of the major cryptocurrency exchange.
How does it Operate?
Well, as far as the price of the crypto is concerned, it is mostly driven by the demand and supply factor in the economy, just like the price of any scrip in a stock exchange is determined. However, the stock market are regulated by the regulating authorities like SEBI in India, but there is no such regulating body in operation for cryptocurrency markets yet. Although, US is in the process of making a regulating body to control the activities of cryptocurrencies and give membership to those crypto operators who abide by the rule of such body. We might see a whole lot of regulatory bodies for this segment in the coming years.
Let’s turn towards the real deal for common folks. Exactly how does a transaction occur using these cryptocurrencies. Well the answer is as simple as you already know. Transactions in cryptocurrencies occur the same way that you make transactions using any other fiat currency. There are various e-wallet service providers, in which you can keep your crypto tokens (Bitcoin in this case). The only thing is that you may need to route through a crypto exchange in order to get hold of this currency unless you are getting paid by some other user. Several crypto exchanges are in operation now a days from where you can easily buy bitcoin with credit card or choose for the USD to BTC conversion over the counter. You can pay a part of Bitcoin in order to fulfil your transactional payment just as a cent in case of a dollar. Not to mention that you can transact with Bitcoin through electronic mode only.
That concludes the basic understanding of how this crypto operates in the real world. Bitcoin and its peers hold the potential for a revolutionary change in the operations of an economy. But this market is not stable at the moment. It is driven by flow of transactions driven by sentiments of opportunistic and fear of loosing big. For any new mode of transaction to overtake the current fiat monetary market, it must be as stable and regulated by a responsible authority. It is definitely going to take some considerable time for cryptocurrencies to get regulated. Until then, people will continue to use Bitcoin as per their potential and needs thereby making a strong case for its mass adoption.