Bitcoin, a virtual currency that caught the world’s attention this year. The market price of 1 bit coin (BTC) = $13 at the beginning of the year topped $1000 at the end of November as the name recognition increased.
The “currency value” is still swaying in December when the Chinese authorities, who were wary of the effects on the renminbi, began to implement regulations. However, why did data, which was simply data on the Internet, come to have such a presence? Bitcoin seems to reveal the essence of currency, which is also described as a “joint illusion”. I searched the background of the formation.
The Cyprus financial crisis of March this year triggered the maniac existence of Bitcoin, which was mainly distributed among so-called geeks (otaku). Bitcoin, a stateless currency on the Web, became a haven for assets when the government decided to tax bank deposits.
Then China overheated the market. In October, Baidu, a major online search company, adopted bitcoin as a payment currency, so demand surged (later acceptance stopped). The market price on the Bitcoin exchange “Mt.Gox” rose to $1242 per BTC at the end of November.
The Federal Reserve Chairman Bernanke pointed out in a letter in November that “the cryptocurrency is promising in the long run,” which also helped to authorize. The market price of Bitcoin strongly reflects the authority and credibility of a currency
Then began to worry about the negative impact on the renminbi. The People’s Bank of others announced on the 5th that they would ban the provision of financial products and payment services using bitcoins to financial institutions, saying “to prevent the renminbi’s status as a legal currency from being impaired.” With this, the market price has plummeted, but as of the 27th, it remained around $800 per bitcoin, which remains a certain value.
Bitcoin known to the world, it has become even popular in the United States and Europe as a payment method for stores and mail order sites.
Bitcoin is said to be similar to gold in that the amount issued is limited by the program and there is a market price for currencies such as the dollar.
But while gold is valuable as a decoration, bitcoin is just data. The reality that non-valued things have begun to circulate as a means of payment seems to embody the essence of a circular theory of currency: “it is valuable because everyone thinks it is valuable”.
Imagine the value of Bitcoin
If you think this way, it may be easier to imagine the value of Bitcoin. Originally, currencies such as dollars have a history of development as exchange certificates for precious metals such as gold that were used as currencies before that. The dollar is valuable because it can be exchanged for gold, ignoring the current non-gold standard. With the establishment of the exchange, Bitcoin can be exchanged for dollars, and it has become valuable as a token of exchange.
For all Bitcoin transaction information, you can visit the bitcoin evolution official website. At each transaction, other users verify and approve that there is no fraud or double payment fraud. Since the user himself/herself is responsible for maintenance/operation, the operating cost of the system is reduced. New bit coins will be allocated to users who have been verified by computer processing. This work is called “mining” after gold mining, and is an incentive for mutual monitoring.
Bitcoin, which has an upper limit of issuance, is not affected by the creditworthiness of the government or the monetary policy of the central bank. Currency restrictions will not limit overseas remittances, nor will quantitative easing diminish their value. Such freedom from authority and statelessness.
The issuance pace will be halved every four years to increase rarity and prevent decline in value. The bitcoin design was evaluated as the most complete virtual cryptocurrency ever and gained solid support from Geek. It can be said that the “truth” of Bitcoin is that this began to permeate the general public after the events such as the Cyprus crisis.
Low-cost Bitcoin is competitive with existing high-cost services provided by companies and the like. The same thing that Wikipedia replaced the encyclopaedia that costs tens of thousands of yen might spread in the world of payment.