Physical currencies offer greater advantages compared to bitcoin. In actuality, bitcoin is an emerging currency, however technologically, it is a dramatic development.
Basically, digital currencies are merely liners of computer codes that have monetary value and these codes came about from speedy computers. Currencies such as bitcoin is generated by painstaking mathematical computations and operated by millions of computer operators known as “miners”.
It was initially created by Satoshi Nakamoto in 2009 who supposedly disappeared leaving behind a wealth of bitcoin. In the past few years, many people are pleased with the profits these coins have generated. From 2011 to 2013, the currency was highly attacked by criminals who purchase them in an installment of millions of dollars so they could go unnoticed by the law. Such transaction cannot be taxed and there is no legal regulation that is tracking these coins. Therefore, it is a fact that these coins do not abide by any traditional banking system.
There are no rules governing the currency and there is no guarantee to replace it such as any other valuable metal. The currency only has limits to itself as there are only 21 million bitcoins created which will be allowed to circulate and there is already 11 million that are in circulation presently.
Additionally, there is no regulator for the online bitcoin transactions. Bitcoin users also lack insurance security. Furthermore, there is no government institution or central bank that controls bitcoins. The recent fluctuation in bitcoin prices is as a result of criminals making large transactions.
There is one outstanding question though; How can a currency that originates from scammers be popular as used as a mainstream investment with the high risk of fraudulent activities? It has recently become a global concern on the craze for bitcoin and other digital currencies. In an effort to cut down on market speculation, China put a ban on all cryptocurrency transactions last year. US lawmakers were more lenient when it came to bitcoin transactions last year. However, there have been warning from the Federal Reserve of a possible threat to investors.
This drives us to whether bitcoin will stick to its traditional practice of remaining a digital currency free from any control, or will turn to be one of the currencies that are controlled but remain a risk-free financial asset?
In countries such as South African, Sudan and Kenya which are faced with currency issues, bitcoin has become popular in the last few years as people see it as a safe haven from political and economic confusion.
Bitcoin is also used by many to make transactions in other countries they cannot access. Some are also using the currency because of the lack of trust in the government or banking system.
Regardless of the many warnings regarding the risk posed by bitcoin, online brokers are offering future bitcoin transactions.