Throughout history people have tried to come up with alternative currencies but none have gained the popularity enjoyed by Bitcoin.
The Bitcoin phenomenon began back in 2009 and by the middle of 2013 it was estimated that the value of Bitcoins currently in circulation was approximately $400 Million US. Like all currencies, the exchange rate of the Bitcoin fluctuates and we have seen some huge extremes. But, if you purchased Bitcoin early you will have likely seen a huge return on your initial investment.
Domain registrar NameCheap made the news in early 2013 when they first started to accept the digital currency. As of January 2014, due to the increasing number of requests from their customers; numerous merchants and retailers began accepting Bitcoin as a payment method.
Reasons for Bitcoin popularity:
- Bitcoin has no borders and is not backed by any government.
- You do not have to pay the high conversion fees you would with a regular bank.
- A Bitcoin transaction is not reversible due to the verification process. This helps prevent fraud and un-necessary returns on purchases.
- It is possible to exchange Bitcoin into your local currency whenever you wish.
Bitcoins are becoming so popular that dedicated websites are being set up that allow you to purchase in Bitcoin.
The Future of Bitcoin
Of course, there are many people who are just waiting for the Bitcoin popularity bubble to burst. People are wondering if there is a weakness in the system that will cause it to eventually crumble. Will governments central banking authorities move to seize control? Or can it be hacked or corrupted by dishonest users?
The biggest issue with the Bitcoin system would be keeping the private keys a secret. People have accidentally lost their private keys or leave them displayed on their home computers, without thinking.
While users are advised to protect and encrypt their online wallets, they do not always do so. Some users suggest splitting your private keys into shorter sections and storing them on different devices.
One good way to help protect the privacy of your keys is to back them up to an offline website such as Google Drive or onto a USB device.
While there is a cap set on the number of Bitcoins that can be mined. There are no set rules on how each bitcoin can be broken down. The possibility of new units appearing is real. Currently each Bitcoin is broken down into 100 million units.
If you have paid attention to the exchange rate of the bitcoin you will see that it is very volatile. Rates can increase and decrease by as much as 50% in one day. This will certainly discourage some people from using Bitcoins altogether.
The general way of thinking is that the rates will start to stabilize as more businesses accept and more people start using Bitcoins.