By Jonathan Saenz
Courtesy of AP images.
Since it’s humble beginnings in 2009, Bitcoin is a decentralized digital currency that has shown the world a new way to buy, invest and sell. This cryptocurrency started out with a value of virtually nothing. Since then, it has climbed the charts and reached a height of $7,458 for a single Bitcoin, according to CoinDesk, a news site that specializes in cryptocurrencies.
Why has Bitcoin become so popular? Bitcoin is not controlled by any banks, corporations or a person. It is not tangible like the U.S. dollar or the Mexican peso, you’ll never actually hold a bitcoin because it is stored electronically, on your computer or smartphone. The benefit is you can control your own money, with no middle-man charging you minimum balance fees, foreign transaction fees, lost debit card fees, etc.
One reason Bitcoin has become so valuable is the fact that it’s complete anonymous. “Nobody knows who is selling, who is buying. It’s just a digital system and computers are involved in it.” said Dr. Shahidi, the economics advisor and professor at College of the Desert. “So fundamentally that’s always been a good thing for illegal activity.” said Shahidi. Bitcoin had a bad reputation early on due to it’s anonymity and use for illegal transactions. But, as Bitcoin evolves its becoming further accepted and its usage, more constructive.
“[People] now can order Netflix with Bitcoins,” said Shahidi. Which is true, according to CoinDesk, you can buy almost anything with Bitcoin, from a hotdog at Sleep Train Arena, home of the Sacramento Kings, to your next airline ticket on Cheapair.com. Individuals aren’t the only ones who are acknowledging Bitcoin’s potential. “People who are in the banking system, corporate executives of banks and people who are in the federal reserve for example, they have been buying it. Believing that, and I agree with them, over time [Bitcoin] will grow.” said Shahidi.
Accessibility and freedom are key components to Bitcoin’s burst into the mainstream. But before it is bought or spent, it must be created, strictly speaking, mined.
“Mining” is a process of confirming Bitcoin transactions and keeping track of those transactions on a public ledger. The Bitcoin miners, in return for their services, get rewarded new Bitcoins. So, can anyone take up mining? With the right equipment, yes.
“I’m in the process of building a computer powerful enough to be able to mine.” said Adrian Salazar, a computer science major at COD and Bitcoin enthusiast. “Computers that are capable of mining Bitcoin typically require a lot of computational power, i.e. very expensive hardware.” Salazar continued. The “expensive hardware” Salazar mentioned are graphics processing units (GPUs). “The market for such expensive [GPUs] is very limited as a result of the mining craze.” said Salazar. As Bitcoin is increasing in popularity, it is also becoming harder to mine.
As far as investing in Bitcoin, some advice from Dr. Shahidi: “In the process of [Bitcoin] growing it will have all these ups and downs. So if you’re not afraid of those ups and downs, I say don’t spend all of your money on it.” Shahidi continues, “I think it’s an interesting, new, challenging concept and to be involved in it carefully is okay.”
Will Bitcoin stand the test of time? No one can accurately say. Through the years Bitcoin has proven to be unpredictable. “I know Bitcoin experiences very volatile growth so it can go up and down at any given moment very substantially.” said Salazar. Although Bitcoin’s price is a rollercoaster, Shahidi is has positive views on its future, “There will be more money, more demand for it. [Bicoin] may be going even higher and higher.”