Is Bitcoin Becoming a Legitimate Currency?

The bitcoin logo has been imprinted onto an actual coin.

(photo courtesy of pinterest.com)

The bitcoin logo has been imprinted onto an actual coin.

Bitcoin. Everyone’s talking about it, but what is it? If you bought $100 worth of bitcoin when it was created in 2009, you would have approximately $55,000,000 today! Sounds crazy right, but it’s the truth. For over 13 years, bitcoin has been the leading cryptocurrency in the crypto market. You may be wondering what exactly “cryptocurrency” is. Well, essentially it’s virtual money (with which you can buy real items) that is not physical and that is not owned by any form of government. In short, cryptocurrency is not controlled by anyone or anything. In fact, we don’t even know who or what created bitcoin! 

Supposedly, some person, or possibly a group, created a digital currency that goes by the name of “bitcoin.” This person or group goes by the name of “Satoshi Nakamoto.” They are believed to own approximately 1 million bitcoin, which as of April 2021 is worth around $58,000,000,000. However, to this day, no one knows who “Satoshi Nakamoto” truly is. It may even be possible that “Satoshi Nakamoto” had nothing to do with the creation of this currency.  However, what we do know is that it has gone from being worth fractions of a cent to tens of thousands of dollars. 

As of April 2021, one bitcoin is worth around $60,000. Recently, bitcoin has become available to spend in multiple stores such as Publix, Burger King, KFC, Subway, and many more. In a couple of decades, it is possible that this will become the main form of currency throughout the world. 

“I do believe in the long run, bitcoin will become more valuable,” said eighth grader Anthony Viverito. “Bitcoin is currently the eighth most valuable asset in the world. Its market cap of over $1 trillion is higher than even Facebook, Tesla, and Samsung. I believe that given enough time, bitcoin will surpass gold in value. I do think that Bitcoin will become more widely accepted as a primary method of payment.”

Other students agree.

“I think bitcoin is a good thing,” said fellow eighth grader RJ Sahm. “I believe that bitcoin is a great cryptocurrency, and is very secure, and can be used nationally. I think that it is smart to invest now because it is just going to continue to rise until it gets mined completely, in one hundred years or so.”

On the downside, bitcoin’s value fluctuates all the time.

In order to first understand why this is, you must understand the basic concept of supply and demand. Simply put, supply and demand are the goods and services that are available for people to buy, compared to the number of goods and services that people want to buy. If everyone wants a specific item, but there’s not enough of that item to meet the demand, the price of that item will go up. If no one wants it, and there is a large quantity of it, the price will go down. This is the largest factor that determines the price of bitcoin. 

Currently, there is only a finite number of bitcoins to go around, about eighteen million to be exact. The reason for this is because bitcoin has a stipulation set in its source code that it must have a limited and finite supply. 

“Bitcoin is also almost immune to inflation as the total amount of Bitcoin is capped at 21 million, whereas other world currencies have the ability to print as much as they please,” said Viverito.

 

This cryptocurrency mining farm adds bitcoins into circulation, and is also a critical component of development of the blockchain ledger. Mining uses very sophisticated computers that solve extremely complex computational math problems. (Photo courtesy of commons.wikimedia.org)

Another smaller factor that influences the price is the cost of producing bitcoin through “mining” it, which is a much more complex concept. Mining essentially means that you can earn cryptocurrency without having to spend any money. Bitcoin miners receive Bitcoin as a reward for completing “blocks” of verified transactions that are added to the blockchain (code). Some popular miners include CG Miner, Awesome Miner, Phoenix Miner, and Nicehash.

 Now, you might be saying to yourself, I don’t have $60,000 to spend, but you don’t need $60,000 to invest in bitcoin. In fact, you can invest in 0.0000001 bitcoin if you wanted to (which is worth $0.0059 as of today). Therefore, in order to buy bitcoin, you do not have to spend the full $60,000 dollars to purchase one. You could start off with $5, $10, $20, $100, really any amount that you’re comfortable with. 

One would also have to sign up with a cryptocurrency brokerage that trades cryptocurrency. A brokerage is simply a person or firm who arranges transactions between the buyer and the seller. They are not only used in the crypto market, but also in stock trading. Some well-known crypto brokerages include Coinbase, eToro, Gemini, and Robinhood. Unfortunately, one must be at least 18 years of age to sign up with any of these brokerages. However, once anyone signs up, buying bitcoin is as easy as taking money out of the bank and clicking a button.

Surprisingly to many people, brokerages are not the only way to obtain bitcoin. Although they are the easiest and the fastest options, a new form of purchasing and selling bitcoin has been starting to emerge recently. In the past few years, bitcoin ATMs have begun to appear all throughout the world. It is very easy to purchase bitcoin from an ATM: simply slide some cash or your credit card in, and bam! Another good side to the ATMs is that there is no age requirement to use them, allowing practically anyone to get their hands on some bitcoin. Now, once you do purchase your bitcoin from an ATM or a brokerage, you are going to need a crypto wallet. 

A crypto “wallet” is quite literally a digital wallet in which one stores their cryptocurrency. Anyone can get their own, and they are very easy to obtain and set up. All one has to do is search up “bitcoin wallet” in one’s browser’s search engine or in the App Store and they will get hundreds of results. Some examples of secure bitcoin wallets are Exodus, Ledger Nano X, Electrum, and Mycelium. Most brokerages come with a wallet in which you can store the crypto you own, however, bitcoin ATMs do not, making a crypto wallet very useful at times. 

Now that you know how to obtain bitcoin, you should probably understand how it works. In short, bitcoin is a decentralized currency that moves around in a ledger known as a blockchain. Essentially, there are thousands of blockchains throughout the world. Any given blockchain consists of a single chain of blocks of information, arranged chronologically. Whenever one sends or receives bitcoin, it goes through the blockchain.

Despite all the amazing things you have heard about bitcoin, there are also some downsides to it. One of the biggest is that criminals, especially those who operate on the black market, use bitcoin to pay for items. The reason for this is because bitcoin is anonymous and theoretically untraceable, allowing criminals to practically buy anything without a hassle.

Yet another downside is that bitcoin has a history of fluctuating in price a lot. At times, it can go from $40,000 to $32,000 as seen just in January of this year. The good news is that bitcoin has become more stabilized as of lately.

“I think investing in bitcoin is a good idea, but it’s still risky,” said eighth grader Kian Interlandi. In 10 years, bitcoin could be worth half a million dollars, or zero dollars. If you’re up to the risk of buying it, the reward could be massive. It also seems like the US government is more for it, rather than against it. Since bitcoin is considered a form of digital gold, it could go up to 500,000 dollars a bitcoin.”

“All things considered, bitcoin might have many advantages, [but] it still is an extremely volatile asset,” said Viverito.

Entrepreneur Elon Musk and his company Tesla recently purchased $1.5 billion worth of bitcoin for around $45,000 per coin. Tesla soon plans to accept bitcoin as an official form of payment, and other companies may follow in Tesla’s footsteps. 

In times like these, bitcoin is a fresh, new, and growing currency. Many popular companies have already begun to accept bitcoin as a source of payment. It is already the leading cryptocurrency, and, who knows – it may even become the leading currency in the world someday.