There is too much hype about bitcoin more recently specially when one bitcoin reached worth US$20,000 during November 2017. A lot of people call it Ponzi schemes in which ultimately all investors will lose their money. To some people its money that does not exists but yet a lot of people still are running behind it. Through this article it is stated in simplex words for people who have little or no knowledge of economics, computer and banking.
In today’s world in order to make any transaction for business or other purpose, there is a need of a middle man. For instance, if two person have to make a business deal, they need a third party (a bank) to facilitate this transaction. This bank will charge a fee for this transaction. At same time, it is time consuming too. Consider, if these two persons are located in two different countries, the money transfer process get more complicated and the cost of transaction increases along with time cost. In this age of information technology, a technology called “blockchain” do exists that somehow is modern solution to facilitate this business transaction. In very simple words, in current case, blockchain may facilitate the transaction between the two parties without having the middle man in-between. A coin based on these technology (such as bitcoin) can make that transaction happen without involving any middle man (bank) and in no time with zero cost to any corner of the world. The technology itself has the capabilities to ensure the “authenticity” of the transaction (by publicly available ledger) to develop the trust between the two parties that otherwise is manufactured by the bank. The records of these transaction (known as ledger) are public so any one can check these transaction and no one can double spend the value. The first currency created by this system is known as bitcoin and its current market capitalization varies between 350-170 billion dollars in last three months. But its just around 40 percent of total digital currency market. As rightly claimed by many, bitcoin was tip of an ice-burg for digital currency, currently there are over 1500 digital currencies in market and counting. Even some countries are working on introducing their own digital currencies.
The question if its Ponzi or undeniable reality is a million-dollars question. To start with, bitcoin is based on an undeniable technology. The community using this technology is growing exponentially. At start of bitcoin it was blockchain 1.0 in 2009 and hardly anyone was using it. Today its blockchain 3.0 in market. Starting from just currency now its moving its applications to land records, voting, control of corruption, smart contract just to name few applications. This may lead to simple conclusion that blockchain revolution is unstoppable.
Bitcoin is blockchain based digital currency. There is disagreement among the experts if it is actually a “currency” given that the major fundamental functions of the currency are: to use is a mean of exchange, as a store of value, and as measure of value, is missing in bitcoin. But there are good numbers of opponents to these claims that argue that bitcoin is acceptable for exchange in many firms across the globe (and this is increasing with passage of time), and that it has intrinsic value in it too, in the form of computing power used by the miners in mining these coins. In addition, its store of value as it can be used in future for transaction.
The major challenge that bitcoin and all other crypto currencies are facing that as on today, not many countries in the world are allowing it as a legal money. The biggest arguments against all crypto currencies are: these are decentralized currencies and mainly use for illegal activities. There is no control of government on these currencies for tax or other purposes. It will be also important to mention, that fraud in initial coin offering (similar to initial public offering by private limited companies via stock market) by some currencies developers and hacking of exchanges make these currencies riskers. In addition, the volatility in its value is also a big issue.
So what is the future of bitcoin and blockchain? It is evident that none of these are stoppable. Blockchain as a technology is growing and its applications to other fields will speed up its further growth. Blockchain based currency system is also unstoppable. It has the potential to change the way business is run today, the way banks are operated today, and the way central banks apply their monetary policies. This for sure is going to pose a big challenge for the central banks in future irrespective of if these digital currencies are banned by the governments or if it is allowed to be used.
Done
thanks :)
Explained bitcoin and blockchain in simplest words i have ever read it. Great article about bitcoin , blockchain and use cases of blockchain. Worth to read it !!!
thanks :)
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