It's been a while since I updated you about the Bitcoin dream success. I am trying since last week to write about cryptocurrency today I here to share it with all of you.
In 2021, the price of a single Bitcoin the leading cryptocurrency $60,000. And the market value of all cryptocurrencies reached a staggering $2.5 trillion. bitcoins promised to create a new decentralized financial system. Beyond the control of governments and banks, has captured the imagination of the world.
It's become a bit of a social phenomenon, @MarkZuckerberg, the boss of Facebook, as pet goats, and his name then Lux and Bitcoin.
But so far, the Bitcoin dream has not been realized. Rather than becoming a new form of money, Bitcoin has become a highly volatile investment asset, creating big winners, investors have sent its price skyrocketing during the pandemic, and big losers. The crypto valuation lost a third of a trillion dollars just overnight. For the believers, Bitcoin is still a digital stepping stone towards a utopian future. For the skeptics, the crypto market is nothing more than a digital casino, too volatile to be trusted. So what will become of the Bitcoin dream? It all started in 2009. Somewhere in the world, a shadowy figure hiding behind the name of Satoshi Nakamoto created the very first Bitcoin. It was the start of a digital revolution. Bitcoin and the 1000s of cryptocurrencies that have followed are nothing like actual coins. They aren't code reported on a digital ledger that gets longer and longer as more people use them. And embedded in Nakamoto, as code for the first batch or block of bitcoins, was a newspaper headline.
Bitcoins creator put that headline in the first block because he wanted to send a signal. He wanted to show that people were looking for alternatives after the financial crash. And the question that people were asking is, can we trust financial institutions with our money, and Bitcoin was the response.
Trust is at the heart of the current financial system. banks and other financial institutions control how money flows around the economy, faith that their Ledger's are accurate is vital. This is because money is simply a social convention. It exists and has value because we agree that it does. This agreement only works because we put trust in financial institutions such as banks, Bitcoin does not require trusted institutions. Nakamoto wanted to create a secure system that did not rely on any trust at all. To achieve this, the coins are registered on a revolutionary technology called blockchain, which is a ledger of transactions that are not held by a centralized institution. Instead, transactions are verified and logged by a network of computers all over the world. In a process known as mining.
Bitcoin mining is for two purposes. One is to put new bitcoins in circulation. And the second one, which is also essential is to verify transactions on the network.
But it's a complex process. If someone wants to make a transaction, everyone on the network is alerted. The transactions are verified by so-called miners. First, they check the transactions are legitimate. Once a miner has checked a few 1000 transactions, they group them in a block. That's the easy part. The miners then race for the rights to add this block to a string of those previously made known as the blockchain. To do this, they compete to solve a complex numerical problem. The miner that solves it first sees their block added to the chain and they are rewarded in Bitcoin. This whole process is incredibly energy-intensive and is contributing to the climate crisis. As of May 2021, Bitcoin mining use more electricity annually than the whole of the Netherlands to keep Bitcoin scarce, and to help maintain its value. The number of bitcoins that can be mined, is capped at 21 million. To date, almost 19 million bitcoins have been mined, but they cannot yet be classified as money. For something to be considered money. It has to work in three ways, as a medium of exchange, as a store of value, and as a unit of account.
For all the main functions of money that you can think of actually so far Bitcoin is not superior to the assertions that we already are, which are many other ways of paying. And that's, you know, the main reason why you can't really call it a currency now.
Here's why. Fundamentally, Bitcoin is a string of code with limited use, like a gold bar, it doesn't produce any revenue. Compared to the price of gold. The value of a single Bitcoin is hugely volatile, and a single tweet can change people's faith in it as a future currency. As a result, its price moves wildly up and down as people buy and sell it. And unlike the dollar, there's no central bank or government to defend its value. This volatility also makes Bitcoin very hard to use as a medium of exchange. So a seller on Amazon is unlikely to accept Bitcoin for their goods. As the following day, the price could vary dramatically. As happened on May 19 2021, the price dropped almost $8,000 in less than an hour. But that's not stopping El Salvador, the Central American country has become the first to adopt Bitcoin as legal tender. It's a major gamble.
Bitcoin doesn't really work as a means of payment, because it's very inefficient, it can process only 10 transactions per second, when you know VISA credit card company can do as much as 24,000 per second.
So if Bitcoin doesn't work as a way of paying for things, what gives it value, like shares and bonds, it's also traded as an investment. This has led to a speculative mania, where teenagers have become millionaires.
And it's not just a maybe a get rich quick scheme as a lot of people put up but I see it as the future of currency,
And others have lost at all, literally, in 2013, one unlucky man in Wales even scoured a rubbish dump for a harddrive containing 7500 accidentally discarded Bitcoins. Without that file. There is no way of getting the money back because there is no central central server that records a log of it. Today, that hard drive would be worth $218 million If only he could find it. But investing in cryptocurrency is no longer for early adopters and armchair investors. It's attracting attention from some of the world's biggest banks, including Morgan Stanley, which now offers investors access to Bitcoin funds. But even cautious buying from some financier is brings greater scrutiny.
Banks are taking tentative steps to get into bitcoin. regulators are watching this closely. And so far, they've only loaded a limited set of things that banks can do. They can provide access to the market to clients, but they can't bet on the markets themselves as important using their own capital.
And regulators are also wary because Bitcoin has a dark side.
So Bitcoin has been used to fund criminality or to launder money. If you venture on the dark web, which I did. For an article recently, you'll find that everything from stolen credit card details to drugs, is priced in Bitcoin has also been a lot of thefts from crypto exchanges, and a lot of fraud.
And it's not just criminality that is ringing alarm bells. leading economists have warned that Bitcoin is a dangerous bubble destined to burst and join the graveyard of historically hyped up investments. Like the tulip mania of the 1630s, where the price of tulip bulbs rose sharply before spectacularly crashing, or the.com. Boom in the late 1990s. In 2018, there is reason to believe the sceptics might be right. The sharp surge and later drop in the price of bitcoin mimicked these historic bubbles, a pattern which continued into the first half of 2021, the price soared to over $60,000, only to fall again.
The Bitcoin market is very fragile. In 2020 and 2021. We've seen the student sharp drops in price on the basis of very little and then they partially recover for you know, other bits of you That are completely unpredictable.
Supports your see cryptocurrency as a burgeoning asset class with real value more like gold than tulips. But the jury is still out on whether the comparison is accurate.
Bitcoin or another cryptocurrency might become, you know, relatively stable or trusted as a class like gold. But it's too early to tell because you can see today, as soon as people think it's no longer a good investment, then demand plummets. And
Perhaps the biggest winner from its climb is bitcoins mysterious inventor Satoshi Nakamoto. assuming of course that Nakamoto is a real person who is still alive. They're thought to earn more than 1 million Bitcoin, currently worth around $37 billion. Bitcoin may yet become a stable asset like gold proved to be a bubble that burst spectacularly But one thing is for certain the utopia Dream of Bitcoin becoming a new form of money beyond the control of governments and central banks is still as elusive as the technical He is Creator.
This is all About what I want to write since last week. Hopefully, you learned something as I m not export with this.
Thank you for always being with me.
Awais_shah72