Bitcoin Essay

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The finance world is finally abuzz with news of bitcoin and other cryptocurrency. What are cryptocurrencies, and what do potential investor need to know about them? This bitcoin essay offers a brief background of bitcoin and other cryptocurrencies, also referring to the blockchain software that underlies them. Then, this bitcoin essay explores what financial analysts say about the viability of bitcoin as an investment. Finally, this essay will how and why people purchase bitcoin, as well as how bitcoin can be used as both currency or as investment.

Because they are taking the financial world by storm, is important to learn about bitcoin and other cryptocurrencies. This bitcoin essay will explain bitcoin in simple terms anyone can understand. Ultimately, this essay will show that bitcoin is a risky but potentially lucrative investment. Although the numbers of “bitcoin billionaires” is low, there are a lot of ordinary people who have made a lot of money by purchasing cryptocurrencies.

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Titles




Boom or Bust: Is Bitcoin Too Good to Be True?
How Bitcoin and Other Cryptocurrencies Work
Beyond Finance: How Bitcoin and the Blockchain are Changing the Future
The Role of Bitcoin in Unstable and Developing Economies
Possible Futures of Bitcoin


Topics




Bitcoin as an investment
How do bitcoin and cryptocurrency exchanges work?
What is a blockchain and what uses does it have beyond bitcoin?
Bitcoin from a macroeconomics perspective
Bitcoin from a political perspective, and how it potentially disrupts neoliberal capitalism
How bitcoin can be used in money laundering


Outline



I.  Introduction

A.  Brief definition of bitcoin and cryptocurrency

B.  Brief overview of how bitcoin evolved and what it is used for

C.  Thesis: Bitcoin has become an attractive investment because it allows people to bypass government regulations, but the future of cryptocurrencies is uncertain.

II.  Why is bitcoin popular

A.  History

B.  Blockchain, briefly

C.  Other cryptocurrencies

III. How does bitcoin work?

A.  How to buy, sell, and trade bitcoin

B.  How to invest in cryptocurrencies in general

IV.  Financial outlook

A.  Skyrocketed in value, causing many people to become “bitcoin billionaires”

B.  Slumping now due to fears about government interventions.

V.  Conclusion

Essay Title



Is Bitcoin Really a Good Investment?

Essay Hook



Bitcoin is a revolutionary type of currency that is not tied to any one state, government, bank, financial system, or even to a tangible like gold.

Introduction



By now, bitcoin has become a household word. Just a few years ago, bitcoin was only known by a select few, a cadre of geeks and pioneers from around the world drawn to the appeal of an open source, unregulated, decentralized, and even socially conscious financial system. Liberated from the typical features of a capitalist market, bitcoin is based on algorithms. The underlying principle of bitcoin and other cryptocurrency is the blockchain, so-called because each transaction is processed and recorded in bits, adding another link to a giant global chain. Bitcoin can be used to make anonymous peer-to-peer digital transactions, and is used in this way. However, the more people who bought bitcoins, the greater the demand for its currency. As per the law of supply and demand, the value of bitcoin skyrocketed in a number of years to the point where it is now worth well over ten thousand dollars. Thus, bitcoin is now viewed almost like an ordinary investment.

Unlike regular currencies like the Dollar, Yen, or Pound, bitcoin is not tied to a nation or to any bank. It is unregulated, and bitcoin transactions are totally free as well as private. Bitcoin can be used as virtual cash, to buy things online, or it can be traded like a stock on what are known as bitcoin exchanges (“Bitcoin Exchanges,” n.d.). Yet there is so much more to bitcoin than just currency. Because it transcends the capitalist and neoliberal global market system, bitcoin is practically a philosophy. Also, bitcoin can potentially change the way people value goods and services. The value of a bitcoin or any other cryptocurrency lies mainly in user behavior. As such, bitcoin has transformed the ways people can conduct their financial transactions and place value on the goods and services they trade.

Thesis Statement



Bitcoin has become an attractive investment because it allows people to bypass government regulations, but the future of cryptocurrencies is uncertain.

Body



What Is Bitcoin?



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/> The creator of bitcoin remains anonymous but uses the alias Satoshi Nakamoto (“What is Bitcoin?” n.d.). Nakamoto created bitcoin in part to resolve the challenge of creating a digital currency that was totally liberated from the traditional banking system. As Wallace (2011) points out, the creation of bitcoin coincided with diminished trust in the government and Wall Street. Also, bitcoin succeeded where other technologies had failed. Until bitcoin, all other digital currency models remained tied to the known currency markets, systems of exchange, and methods of conducting transactions. Nakamoto changed everything by thinking outside of the box.

What made bitcoin different was the block chain. The block chain works similar to the way torrents work, in that multiple users around the world participate in the virtual chain. Rather than relying on a centralized system or server, there is a potentially infinite number of ordinary users with desktops, laptops, or more sophisticated machines like servers. Each link in the chain conducts algorithms, generating more bitcoin as currency as a result. When any bitcoin transaction is completed, it becomes an immutable member of the block chain.

Why is Bitcoin Popular?



Bitcoin became popular because of several reasons. One reason is that bitcoin and other cryptocurrencies can actually be used to make anonymous peer-to-peer transactions. In fact, bitcoin was initially designed solely with this function in mind (Hawkins, 2017). Making online purchases with bitcoin would have been like using a far more anonymous version PayPal, one that does not require the user to link with a bank account or a credit card or give any personal information whatsoever. Using a “cryptocurrency” like bitcoin therefore allows for a tremendous amount of freedom and privacy. Also, there are no foreign transaction fees, no exchange rates, and no credit card transaction fees when using bitcoin. Bitcoin can therefore be beneficial for vendors and consumers. One of the most notable and obvious uses for bitcoin was to conduct transactions on the “dark web,” where consumers can seek and find all types of contraband (Cox, 2015). Another notorious use for bitcoin is as a means of money laundering.

Yet from this initial purpose as a means to make anonymous and secure transactions, bitcoin has taken on a life of its own. Bitcoin is no longer just about making online purchases on the “dark web.” As bitcoin’s popularity grew, so did its functionality. Bitcoin became noticed because of its unique features, its ability to reflect supply and demand in an organic way, its blockchain technology and its relatively tight security.

Another reason why bitcoin and other cryptocurrencies have become popular is that they are detached from the international monetary exchange system. Cryptocurrencies are insulated from the fluctuations that take place in financial systems, and are especially attractive to buyers in countries that have volatile or weak currencies, like China. For this reason, governments are already trying to crack down on cryptocurrency exchanges (Hawkins, 2017). Relatively few people have bitcoin now, but if more people invest their money in bitcoin, the less the governments can regulate their own financial systems, including systems of taxation. Governments are likely to monitor bitcoin in the future, and disguise any attempt to shut down bitcoin as a means of protecting the public. Yet like file sharing online, cryptocurrencies cannot be fully regulated or monitored in any meaningful way in the long run, which is why the cryptocurrency model remains extant. Bitcoin and other cryptocurrencies use open source technology, and the block chain system makes it so that it is difficult to cut off the head of the hydra—there is no hydra, no centralized system as there would be with a bank or any formal organization.

Finally, many people are attracted to bitcoin because it has a rogue character. Bitcoin and cryptocurrency reflect an anarchist, pirate trend in politics that can be disparaging towards neoliberalism, capitalism, and other features of the global marketplace. Bitcoin is based on open source software, which by definition eschews intellectual property concepts. Cryptocurrency allows people to conduct transactions that are off the typical financial grid, which means not only that people in developing countries stand to benefit but anyone who does not perform well under the prevailing financial model.

The decentralized, slightly risky, and “cool” factors make cryptocurrencies exceedingly popular, but they are creeping into the mainstream. All mainstream news sources have been reporting on cryptocurrencies because their value has gone up exponentially over the past year or two. Bitcoin and cryptocurrency have been described of in near-religious terms, too. The first fifty bitcoins are known as the “genesis block,” and users of the currency are described as “evangelists” and communitarians who genuinely want to make the world a better…

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