This article about bitcoins, a digital cryptocurrency using open chains, is written by Lloyd Wells, content specialist working with Best VPN, a review website for VPN web hosting services. You might also want to check out HostGator and Bluehost.
Bitcoin, abbreviated as BTC, is probably the world’s most famous digital currency and you may have heard about it (else read the history of bitcoin on Wikipedia). But there are many misconceptions, wrong ideas and downright mysteries hanging around the currency. Here are 8 things you didn’t know about bitcoin.
1. No-one really knows who the inventor is
The origins of bitcoin are a little murky and the man credited with creating the currency is Satoshi Nakamoto, who published the idea in 2008. However, has been suggested that Nakamoto was never a real person and was in fact the pseudonym for a team of people who created the coin. Either way, Nakamoto handed over control of the project to Gavin Andresen in 2010.
2. And Gavin Andresen calls bitcoin ‘risky’
Now the lead developer on the bitcoin project, Andresen has been careful to ensure people understand that bitcoin is not necessarily a stable investment. After a data leak in 2011 which saw the bitcoin value plummet, Andresen stated that bitcoin was an ‘experiment’ and said that investing money in it was inherently ‘risky’.
3. It’s the most expensive currency in the world
Currently the most valuable of the traditional currencies is the Kuwaiti Dinar; 1KWD is worth around $3.20 at the time of writing. According to the value tracking Coinbase.com, 1 bitcoin is worth around $648 (on 24 October 2016). Of course, currency value fluctuates all the time but currently there is no currency, virtual or standard, that is close to its value.
4. It’s banned in some of the world’s biggest markets
Bitcoin is not welcomed everywhere across the world. In fact some of the world’s largest economies have banned its use, either directly or indirectly. It was ruled as illegal in Thailand in 2013 and in Vietnam in 2014. Banks and banking institutions are also banned from using or doing business with bitcoin in China. And there are also partial bans and legal disputes in Russia, India and Sweden.
5. If it fails, there’s no backup
Because bitcoin is a digital currency that isn’t tied to anything, if it loses values there’s absolutely nothing to stop it from completely crashing. When the pound’s value fell due to Brexit and other market implications, the British government and the Bank of England to steps to ensure that it still remained strong. If that happens to bitcoin, there’s no country or national bank to protect it.
6. Saving money in bitcoin is actually counterproductive
Unlike in most currencies, where saving money is a sensible move, saving or hoarding bitcoin is actually a negative for the currency. You might think that hoarding lots of bitcoin would add to its scarcity and make it more valuable, but this isn’t the case. This is because bitcoin is only worth money if other people will accept it. If people stop spending bitcoin that will mean that people will stop accepting it as well, and that will make the value fall.
7. Nothing to stop bitcoin wallet services from stealing your money
To hold bitcoin you need something that’s called a bitcoin wallet and there are a number of wallet providers. None of them are officially tied to bitcoin and functionally there’s nothing to stop them from simply closing and taking all your bitcoins with them.
8. Bitcoin can be stolen
One of the apparent advantages of bitcoin is its level of security and the challenges in stealing from it. However, in 2011 a user on a bitcoin forum claimed that 25,000 bitcoins had been stolen from his wallet. Because of the nature of bitcoin wallets this is something that is very difficult to confirm and almost impossible to prove.