Bitcoin has been nothing short of surprising, and at times baffling, since the end of 2017. The cryptocurrency (forms of digital currency) originated in 2009 and although it has stayed relatively quiet through the years, it experienced a shocking 900% increase in value towards the end of year. Hence began this craze in all forms of cryptocurrency - and some pretty good memes.
You've likely seen a segment or two about Bitcoin on the news, or a few memes, or maybe you have some friends that "got rich overnight". If you're still confused, never fear. As simple as we could make it, we've got a beginner's guide to Bitcoin and the latest you need to know to get up to speed.
Bitcoin was invented by Satoshi Nakamoto, the unknown inventor of the first ever cryptocurrency. It was meant to be decentralized and with no server or central authority - meaning that it wouldn't be regulated by banks or governments from around the world.
Sounds a little sketchy? It would be, if not for Blockchain technology. Blockchain is what people are calling an incorruptible digital ledger of financial transactions. Imagine if every transaction, that every person ever made, was public knowledge and constantly updated on this "master list". And that instead of a single person holding this list, millions and millions of computers held it simultaneously.
So yes, blockchain is fully transparent - everyone can view it and it updates every ten minutes. And as it stands, it's "incorruptible". To alter any unit of information on the blockchain would mean using a huge amount of power to override the entire network - AKA those millions and millions of computers we were talking about earlier. While in theory it's possible, it's incredibly unpractical.
Nearly 700 different cryptocurrencies exist in the world, all similar to Bitcoin. There are a few other relevant currencies, but we'll save that for another time. All of them belong, and are registered, to this blockchain.
So what's the point of all this? Because these currencies are digital, Bitcoin can be moved to anywhere in the world, anytime, and because of the blockchain, it's being moved securely. It solves a theoretical problem that a person in India may have zero interest in another person's Canadian dollars. And these currencies, can be converted into any other physical currency in the world.
The rise took everyone by surprise. If you're looking to buy Bitcoins, you can visit these marketplaces called "exchanges", where people buy or sell Bitcoin in different currencies. You can transfer them using mobile apps or computers, very similar to sending cash digitally. People are constantly "mining" Bitcoins using computers to solve complex math puzzles. This is how the coins are created and there's actually only a finite supply of this resource.
The downside? While every transaction is recorded on the Blockchain, names of the individuals are never revealed - only the IDs of their digital wallets. In theory, they can't be traced, making the currency the choice of those searching for illicit substances or activities - it's not regulated by a governing body or banks, remember?
Not only that, but even though it's unregulated, several countries have begun considering regulations; they're concerned about taxing and their personal lack of control over the currency. Most recently, reports are claiming that South Korea is creating a bill to ban crypto trading. Even just the rumours of that caused for the stock of Bitcoin to fall.
So your best bet? With governments attempting to step in, it's difficult to say what's in store for the future. While we don't recommend trying to multiply your student loan off this volatile currency, it's definitely up to you whether you're looking to get in the action.