If you’ve been following Bitcoin in the past week, you may already know its currently valued at $1000 USD per 1 unit of Bitcoin.
Sounds crazy, but it’s true. After weeks of rising, and then a sudden drop over the weekend it’s been holding steady around $1000 USD.
What does this mean? Well, several things:
1. Bitcoin is being bought and sold for $1000 US each
2. Cryptocurrency is now a player in the FOREX market
3. Governments and Banks around the world are slightly concerned
There has been alot of media attention on the growth of Bitcoin and this has been positive for its popularity, but at the same time its lack of clear, objective information is concerning. Financial News in particular discusses cryptocurrency as a volatile, high-risk, and speculative investment play.
What we’re missing is the information on what Bitcoin is, how it works, and what does it mean for the financial industry of the future.
We should start with seeing it as another form of currency like the Canadian Dollar, US Dollar, and Euro – Bitcoin is a method of payment, an asset, and exchange. We can buy things with it, save heaps of it, and trade it for other things.
Only the difference is that unlike the Canadian Dollar, US Dollar, and Euro which are fiat currencies controlled by a Central Banking System i.e. the US Central Bank and European Central Bank – Bitcoin is a decentralized currency. This is a new concept.
It means that all the buyers and sellers of Bitcoin, the transactions of goods/services made using Bitcoin, and all the payment processing involved – is what keeps Bitcoin going.
Decentralized systems theory: the Wikipedia definition said it best
“A decentralised system in systems theory is a system in which lower level components operate on local information to accomplish global goals. The global pattern of behavior is an emergent property of dynamical mechanisms that act upon local components, such as indirect communication, rather than the result of a central ordering influence (see centralised system).”
Think about a school of fish or a flock of birds. These are decentralized systems, and how it works is what Bitcoin is doing.
It’s a crazy idea but it’s true, and it’s working.