Bitcoin is a digital currency that was created by Satoshi Nakamoto in 2009. Since then it has made a great progress. It value has increased a great deal. What makes it so amazing is that the transactions require no third party, which means there is no need of banks. Off course, bitcoin does not exist physically, meaning it has no coins or notes. It exists in the online world only.
Bitcoin is making headlines every day. The greatest increase in its value occured this year. And it is now used extensively for bitcoin gambling in bitcoin casinos around the world. It has also inspired other investors to delve into digital currency. Its popularity is definitely on the rise.
Many companies are now accepting bitcoin. Chief among them are Microsoft and Expedia. Retailers of Japan are said to be accepting the payments in the form of bitcoin. Even a singer of Iceland Bjork has accepted bitcoin for his payments.
Yet despite all these things, it has not got any support of the government or banks etc. Therefore, the question arises as to where it is deriving its value from?
The answer is as simple as it is for all the other things: because there is demand for it from people. Just as all the other currencies, the basic rules of supply and demand are applied to it. They make trade easier by helping to convert the goods of people into something of a tradable commodity.
Some currencies are valuable in themselves, unlike fiat currencies who have value because of the backing of governments. Gold is such a currency which is valuable in itself, and is universally accepted around the world. Bitcoin also derives its value from itself and it is not backed by any government. However, it is not like gold in that it does not have that universal acceptability. There are various limits on its usage. However, they are still employed as a source of value, something that can be exchanged for goods and services.
Despite the lack of government support and universal acceptability, it has managed to create an ecosystem where people accept it as their currency and make trades. Some go even a bit further and consider it better than all the other currencies. They think that in some respects, it has more advantages (Authority Link: http://www.bitcoinwealthgroup.com/advantages-of-bitcoin/) than all the other currencies. For example, inflation will not bother it as much as it would the other currencies because only limited number of bitcoins will ever be produced. It makes seamless digital transfers and can be used across the borders. And the main advantage that it has over others is its resistance to censorship. Where other payment networks would censore certain transactions, Bitcoin could be used for all such transactions.
Opinions about Bitcoin differ a great deal. Some are considering it the future of moving currency while others are suspious about its value and origin. At least for now Bitcoin is the talk of the town while the future is cloaked in mystery for all of us.