Essay Sample on Unlock the Benefits of Bitcoin: Digital Cryptocurrency without Banks

Introduction

Bitcoin is a digital cryptocurrency that is sent between users and operates without an administrator nor a central bank. It was invented in 2008 by a group of people known as Satoshi Nakamoto, who later released its open-source software code in 2009 (Bohme, 2015). Its transaction takes place through a peer-to-peer bitcoin network with the assistance of intermediaries. The verification of bitcoin's transactions is varied out by network nodes via cryptography. These transactions are later recorded in a public ledger referred to as a blockchain (Bohme, 2015). Though bitcoin is a valuable cryptocurrency in the global economy, it is being threatened by technological issues such as hacking and collapse that threaten to sabotage the adoption of the technology. Ostensibly, this essay discusses the potential collapse of Bitcoin exchange driven by recent hacks.

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Bitcoin is valuable to the global economy and the whole commercial society since finances continue to play a vital role in society's evolution through the provision of four fundamental functions: monetary value in exchange, store of value, a measure of value, and a means for making payments. The increase in trade activities and the globe's economic growth calls for the printing of more money (Cuthbertson, 2019). With the invention of bitcoin, an enormous wave of decentralization and shift of value for money is taking place. The change is happening as a result of the change from physical platforms to digitized ones.

With cryptocurrencies such as bitcoin, individuals are shifting from a fiat e-currency type of money to digitized money that acts as a stable store of value (Cuthbertson, 2019). In particular, bitcoins are imperative to countries that are characterized by frequent inflation and have weak currencies (Bohme, 2015). This significance exists because the bitcoin is based on the global ledger, which is equally distributed, and no single country can regulate its price in the economy.

In the past few years, the value of bitcoin was characterized by a surge and plummeting prices, a situation that cryptocurrency experts define as the best time to invest in bitcoins. These experts believe that the value of bitcoin is more likely to continue rising in the next few years to come (Cuthbertson, 2019). The current value and price of bitcoin are challenging to estimate resulting from the volatility of cryptocurrencies since it has been fluctuating between $3000 and $20000 over the last few years (Cuthbertson, 2019). At the moment, the current price of one bitcoin stands at $9800, representing a double-figure compared to its value one year ago (Cuthbertson, 2019.

According to Tim, Draper, a venture capitalist and a cryptocurrency expert, the price of bitcoin will stand at about $23000 by 2021, while other experts opine that it will reach the $1 million mark by 2023 (Cuthbertson, 2019). In January 2020, bitcoin was up by 29% as the value of bitcoin in circulation in the market inflated by $39.7 billion (Cuthbertson, 2019). Cryptocurrency experts attributed this rise to several factors such as return to work after New Year's Eve and the outburst of coronavirus in Asia that aided in propping up its value. The coronavirus had a more significant influence on the rise of bitcoin's value because more inflections around the world led to a massive impact in traditional financial markets (Cuthbertson, 2019).

Bitcoin is facing various challenges in the current digital market, among them volatility and potential theft through hacking. Hackers and malicious individuals have the potential of manipulating online payment systems and stealing private information to commit fraud (Bohme, 2015). Online payments supporting bitcoin payments face this new reality and threat of infiltration by hackers. Besides, volatility has been one characteristic of this cryptocurrency since it was introduced, and it is not likely to come to an end in the future (Wintermeyer, 2020).

Moreover, the value of the digital market and its global environment has made bitcoin very popular, where individuals buy bitcoin with the hope that its value rises in the future. However, this popularity is not aiding bitcoin in terms of currency. Secondly, the potential theft of bitcoin through hacking is the most notorious challenge facing it today (Bohme, 2015). One major case where hackers got away with more than $40 million worth of bitcoin took place in Tokyo, Japan, in 2019 in one of the globe's most substantial cryptocurrency exchange points known as Binance (Kharpal, 2019). The thieves used several methods to steal from the company without notice. Several incidences of attempted hacking on bitcoin are still being reported today, thereby compelling users to raise questions regarding the security of their currencies (Kharpal, 2019). In order to completely curb these challenges, cryptocurrency experts are calling for the adoption of sophisticated data protection and surveillance tools that can give notification on potential theft through hacking (Bohme, 2015).

Conclusion

In conclusion, bitcoin has been beneficial to society. Some of the benefits of bitcoin include digitization of the global economy, handling of a digital currency that is not administered by any central bank, and ease of accessing funds anywhere and at any geographical location in the globe (Wintermeyer, 2020). With the introduction and more use of the internet, the world is shifting from the creation of value in physical assets to digital asset creation. This shift can be signified by the performance of the world's best-performing companies, which are technologically-allied industries where their primary asset is the firms' data. Contrary to these benefits, hacking remains one of the most substantial risks that relate to the existence of Bitcoin.

References

Bohme, R., Christin, N., Edelman, B., & Moore, T. (2015). Bitcoin: Economics, technology, and governance. Journal of Economic Perspectives, 29(2), 213-38. DOI: 10.1257/jep.29.2.213

Cuthbertson, A. (November 2019). Bitcoin price suddenly surges amid positive prediction Retrieved from https://www.independent.co.uk/life-style/gadgets-and-tech/news/bitcoin-price-latest-btc-prediction-cryptocurrency-2020-a9218176.html

Kharpal, A. (2019). Hackers steal over $40 million worth of bitcoin from one of the world's largest cryptocurrency exchanges. Retrieved from: https://www.cnbc.com/2019/05/08/binance-bitcoin-hack-over-40-million-of-cryptocurrency-stolen.html

Wintermeyer, L. (2020). The Role Of Cryptocurrencies In Future Society. Retrieved from: https://www.forbes.com/sites/lawrencewintermeyer/2018/10/26/the-role-of-cryptocurrencies-in-future-society/#26827b6b787d