Worth close to an ounce of gold, Bitcoin is not a gold coin as you may see it in images, you cannot even touch it, put it in your wallet or feel its physical appearance. Bitcoin: “A peer to peer digital cash system” released back in January is 2009 now hits the skies, its growth rate was recorded to 7500% in a single colander year in 2013. The price rose from $13 to $980 in just 11 months.
It is not printed by any government’s central authority, it is generate by collective effort called “Mining” now it’s market worth is over $17 billion. In simple words every Bitcoin transaction is verified by miners and when they do verify the transaction they get rewarded by newly generated Bitcoins.
Bitcoins generation also has a limit, when this digital system was being created, Japan’s Satoshi Nakamoto the developer, also put the finite limit on Bitcoins that could ever be created which is 21 million. Currently, more than 12 million Bitcoins are in circulation and 9 million are still to be discovered.
Since its formation, Bitcoin has been a focus of myths, controversies and conspiracies. And that is questionable either, how a digital currency can dominate the world market without following universal paradigms. Questions may arise; Who has created it? Who is behind it? What is their sole purpose? Why should we trust it?
But its gaining popularity among masses quite rapidly, Japan is also going to recognize Bitcoin as a legal method of payment.
There are two major pillars on which this currency can be classed as legit. First, the mining process is about recognizing transactions and verifying it, this simply means one coin when it was originated till its last location all the transactions and inflows-outflows would be recognized and verified. This requires huge processing power, time and effort which miners do, and since with every transaction mining process becomes more and more complex, takes more time and more complexity involved hence, generate less coins. Second, there is a limit on generating total number of Bitcoins in the World which is 21 million. Now the price can go up and down but not the quantity. There are several Bitcoins exchanges around the world where you can exchange other currencies with Bitcoin.
Bitcoin in Pakistan
According to Tribune, there is only one Bitcoin exchange trade operating in Pakistan. The reason; because it is not popular in Pakistan until today.
Urdubit, established in 2014 by Zain Tariq and Danyal Manzar, gives Bitcoin users in Pakistan a platform to trade the digital currency. However, founders of the exchange hoped that, along the way, they would continue educating Pakistanis about the hidden currency.
There are still doubts on the currency which needs more information, knowledge and understanding. As the entire world is heading towards digital age, everything is vulnerable to hacking. One of the biggest reason for currency fall in 2013 was the hack itself, when the currency crossed $1000 barrier. Mt Gox one of the larget exchanges for Bitcoin was hacked which led to fall of the currency exchange rates.
“In order to secure ourselves, we have 75% of our Bitcoins in cold storage and only 25% on the hot wallet (online),” said Tariq, when asked about the security of the company’s server.
The digital currency has been subject of criticism, as it is believed that lack of regulation and anonymity have led to illicit trading. The most famous case involving illicit trade was the Silk Road website that was eventually taken down by the FBI.
However, Manzar dismissed claims that there is black money involved. He says all the exchanges are following a standard ‘know your customer policy’.
Apart from seeing themselves as an exchange house, the co-founders believe that they can help fill in the difficulties freelancers face while accepting payment for their services. Tariq said 99% of Urdubit’s customers are freelancers and only 1% are active traders.
Currently, there are two major markets of Bitcoin: China and the US. Moreover, it is not the first time that the crypto currency has crossed the $1,000 barrier in its short life.
According to CoinDesk’s Bitcoin price index, the currency hit an all-time high of $1,290 during March this year.
For instance, in China, the Yuan has been facing downward pressure because as Chinese economic growth decelerates, money is pouring out of the country. Some of that money is going into Bitcoin, which operates anonymously and has a decentralised system which helps Chinese citizens avoid the government’s rules on taking money in and out of the country, says Vice News.
Furthermore, in the United Kingdom since its residents voted to opt out of the European Union currency prices jumped and have been on the rise since Brexit.
Moreover, the current demand can also be attributed to Donald Trump and his policy as well the price of the currency that has started to increase ever since his election.