On January 3rd, 2009, the world was introduced to Bitcoin by Satoshi Nakamoto. Bitcoin started a new age of blockchain technology and digital currencies and opened a new market of cryptocurrencies. A new currency that is nearly impossible to counterfeit or double-spend because it has been secured by cryptography.
What’s amazing about bitcoin is that there is no physical bitcoin, but there are balances that are kept on a public ledger that everyone has access to. Bitcoin is also not backed by any banks or governments. Bitcoin then became extremely popular and had a market cap of $2 trillion at one point. Bitcoin climbed as high as $63,729.50 which as gigantic jump from when it first released in 2009 and was worth $0.
Problems with Bitcoin
Bitcoin has large price volatility and making it way too unpredictable to be used as a day-to-day currency. Bitcoin isn’t really used as a day-today currency anyways. Bitcoin is bought as a speculative investment in the hopes that it would go up in value.
Bitcoin supporters say that Bitcoin will end up replacing fiat money. Meaning Bitcoin would compete with national currencies. Fiat money that is defended by the government. The central banks go into the international monetary to buy or sell their national currencies to keep them stable. Without stability, a currency doesn’t work. Because of Bitcoin’s volatility, it makes it completely unstable and thus a terrible currency.
Bitcoin is extremely risky also because of how volatile it is. This goes for all cryptocurrencies because of how young the market is. It’s completely possible for the price of Bitcoin to take wild swings in price within days or even minutes.
Bitcoin also has some black market activity because there are no taxes, no chance of your account being frozen, and it’s all completely anonymous. It’s an opportunity to be used on things like purchasing weapons, gambling, and prostitution.
The Ban on Bitcoin
In 2017, the Chinese government banned all initial coin offerings and banned banks from handling cryptocurrencies in 2013. The Chinese government made decision because of Bitcoins potential use for money laundering and illegal dealings. Many countries have followed suit in banning cryptocurrency and some countries have gone as far as sentencing them the jail time. This caused a severe crash for all cryptocurrencies after China added further restrictions on cryptocurrency