In December 2016, Bitcoin saw its price reach US $903, its highest level since November 2013, and experienced a 54% annual rise while other currencies, such as Pound Sterling and the US Dollar, plummeted in the wake of political upsets. Last year saw the digital currency booming, calling more organisations and investors into the market and, with them, more exposure and media coverage. Individuals and organisations have started to see the cryptocurrency as a stable investment in the wake of Brexit and the Trump victory, but what really is Bitcoin and what does it offer? Here’s our guide to all things Bitcoin and why it’s been such a success in 2016.
First, what is Bitcoin?
Bitcoin is a digital cryptocurrency, held and created electronically but used to trade both online and in person. It is not physically printed and is created by a community of people that can be joined by any organisation or individual. Using computer power, Bitcoins are ‘mined’ from a distributed network which also processes all the transactions that take place; essentially it is an independent payment network which anyone can be part of. However, this doesn’t mean endless Bitcoins can be produced. Protocol states that only 21 million bitcoins can ever be created, but these can be split into smaller amounts (the smallest unit is one hundred millionth). At the time of writing the market value is US $870.69 to 1 Bitcoin.
What’s the appeal of Bitcoin?
One of the biggest appeals of Bitcoin is that it’s decentralised. This means that the currency isn’t controlled by any single institution such as a central bank, so the decisions of a single authority don’t affect the value of Bitcoin. Some people think this is a safer way of managing money.
Paying with Bitcoin means you don’t have to share your personal details online. Unlike credit and debit cards, Bitcoin uses two keys or codes unique to the individual which, when combined, allow you to make payments and transactions without sharing any details like your name or address.
Where can Bitcoin be used?
There is a variety of businesses and organisations that accept Bitcoin payments. Giants like Amazon, Paypal and Expedia now offer their customers the option to pay using the cryptocurrency. In fact, some forward-thinking brands have taken this to the next level, as they have decided to trade solely in Bitcoin. One example comes from the booming iGaming industry: VegasCasino is an online casino provider. If you visit now, you’ll find a wide range of themed video slots, blackjack and other casino games playable by Bitcoin. This allows for a level playing field and a new level of transaction security for punters. Another Bitcoin-exclusive website is PizzaforCoins, a service which allows you to order a pizza or two and pay in the digital currency.
Why has Bitcoin been so successful in 2016?
There have been a number of factors contributing to the success of Bitcoin in 2016. Market uncertainty has certainly played a role in individuals and organisations investing in the currency; while centrally controlled currencies like the US Dollar took a dive following Trump’s election victory, Bitcoin saw a 4% surge overnight.
The cryptocurrency has also received more coverage and started to enter into the mainstream during the last year. Acknowledgement of Bitcoin and the development of Bitcoin Exchange-Traded Funds (ETFs), which are, in essence, shares in Bitcoin, have encouraged mainstream investors and increased trust in the currency.