Bitcoins: The Rising Trend

As cheesy as it may sound, the bitcoin business is the upcoming “hype” item of the world. Not only does the media focus on topics related to bitcoins, but it also features potential crimes and competition regarding the business. Unlike previous trends and booms were mainly thriving in specific regions, the bitcoin business is an example of an economic related trend that spreads across all countries where the internet is available. Since bitcoins personally intrigued me as close faculty members and friends dove into this field, I conducted research to inform readers and myself.

Created by a man named Satoshi Nakamoto in 2009, Bitcoins have been used regularly as a type of currency. Users compete to “mine” bitcoins using the electrical energy in computers to solve complex math puzzles, also known as hashes. Specifically, the total amount that was originally stored was twenty one million bitcoins; at this point, twelve million bitcoins have been already mined. Containing several differences from the major currencies that are normally being used, the bitcoin business certainly interests people from various social classes and backgrounds. The most notable characteristic is that one could anonymously buy merchandise items on the internet, only leaving the customer’s bitcoin wallet ID. Although the bitcoin transaction is recorded in the public log, it is undoubtedly a fact that tracing customers and merchants who used bitcoins are extremely difficult.

As previously mentioned, bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. Similar to a virtual bank account, this allows users to send or receive bitcoins, pay for goods, or save their money. The biggest risk factor, however, is that bitcoin wallets are not ensured by the FDIC, the insurance corporation for federal deposit; this means that one can not recover from potential hacks and viruses. Not surprisingly, Business Insider has recently presented an incident when the contents of a digital wallet belonging to a company named Nice Hash, which included potentially millions of dollars worth of customers' bitcoin, was stolen in a major security breach on December 6th, 2017. As similar incidents have been previously reported, one should be aware of the dangers possessing a wallet without an insurance.

Most importantly, the main factor that caused the “hype” of bitcoins was the development of marketplaces named “bitcoin exchanges.” The marketplaces allow people to buy or sell bitcoins using different currencies. As the price of bitcoins drastically increased over the course of the year, people rapidly investing their money to this area.

One major issue is approaching the market, namely the regulations of bitcoins from certain countries. In order to tame the excessively wild wave of bitcoin investment and exchange within the country, the Korean government imposed major laws that banned certain distinct characteristics of bitcoins. According to CNBC, Korean investors are not allowed to make anonymous trades or create anonymous accounts, as well as having to provide the South Korean government the authority to to close coin exchanges if they felt there was a need to do so. As seen from the fact that South Korea accounts for more than 33 percent of the bitcoin market share according to the MIT Technology Review, it was not surprising to see the bitcoin prices briefly drop 11 percent the following the day. While some argue that regulating bitcoins from many countries would provide safety and prevent from the crash of the so called "bitcoin bubble," others argue that banning the most noteworthy traits of digital currency would lead to a less profitable market.

For those who want to dive into the bitcoin business while being a student or working at Fay, the market is unpredictable, especially now that there are signs of other governments that are willing to regulate bitcoins. The fact that the school has to pay the bills for the electrical energies used to mine and the excessive competition of mining itself makes it difficult. Most importantly, since no one knows what the exchange rate will be in the future due to flexible conversion rates, it is hard to predict if bitcoin exchanges and mining are profitable. Therefore, I would not recommend this risky business to most Fay students, since they are novices at earning profit.

Aaron 19’- Staff Editor

Written on December 15th, 2017

#bitcoin #cryptocurrency