Ross William Ulbricht was treated to a nasty surprise on October 1 when the FBI arrested her in the raid of a public library in San Francisco. His worries did not end there as the FBI proceeded to close down his black market site known as Silk Road. The Silk Road is known to use bitcoin as an exchange for bad deals that include money laundering, drug trafficking and even hiring contact killers. As at the raid the site had made something close to 9.5 million bitcoins valued at above $1 billion.
Despite the bad reputation that bitcoin got from the above incident, its popularity and acceptance has been growing everyday. Overstock.com, eBay and other small businesses are now accepting bitcoin as exchange with traders crediting it that it’s more convenient since transactions can be made freely internationally and it has no delays like the credit card companies. They also love it because of its anonymity; you transact directly without involvement of banks therefore no ledger fees normally charged at banks.
Satoshi Nakamote, the creators of bitcoin in 2009 is unknown group, or rather is unmasked individual. Anyone with a computer can mine bitcoin provided he is able to solve the complex algorithms; this is because bitcoin exists as an open source software program. Bitcoins are mined with strict compliance with a computer algorithm. Currently one bitcoin is said to be worth $800.
Unlike other government maintained currencies bitcoin has numerous merits, for starters its value is not subject to any particular authority, and transactions are also done directly to the intended individual with absolute anonymity. Also the owner of the wallet has the will to authorize payment or not. As the chairman of the Federal Reserve Ben Bernanke once said, “Cryptocurrency may have long-term promise”, and bitcoin is no exception.
Bitcoin like other currencies has its share of demerits. To begin with, being an online currency it is prone to hacks and other cyber crimes. Its volatility is also worrying making it a risky bet especially after it rose from $13.50 to $1200 in 2013 only to drop to something below $500. As bitcoin continues to rise to fame other countries are thinking of regulating it. Recently china banned bitcoin from one of its online exchange while Europe is contemplating regulating it.
Different economists have expressed varied future expectations on bitcoin. While Nobel Laureate economist Robert Shiller opines that bitcoin is a bubble about to burst, Finance professor Mark Williams is in complete contrast as he warns that the value of bitcoin might even drop to $10 by med 2014.However Hugh Hendry, hedge fund manager is hopeful that the value of bitcoin might reach $1million.
It will be wrong if we assumed that there is only one cryptocurrency, bitcoin has received much media attention and preference by many users but besides it are other cryptocurrencies, over 83 to be precise, that have their own unique algorithm and structures. These cryptocurrencies has maimed the power of central banks as they have placed the power to control finances in hands of users.