What is Bitcoin?
Bitcoin is a digital currency, generated through a computer algorithm. It does not exist physically. There is no governing authority or central bank that regulates the operation of the Bitcoin. Through a sophisticated system, Bitcoin’s value is determined by demand-to-bid accounts that can be opened on the Internet. So, it is a virtually unregulated market.
Since the first broadcast on the network in 2009 until a few years later, with $ 1 it was possible to buy more than 3 bitcoins. Time passed and this digital currency attracted many people who believed it as an alternative to investing money as if they were buying gold or other real currencies. The biggest breakthrough happened this year. Bitcoin’s value has risen by more than 1600%.
But skepticism is great. Jamie Dimon, director of Jp Morgan, called Bitcoin “a big fraud, a big bubble. Even Joseph Stiglitz says Bitcoin is a bubble. But Lloyd Blankfein, director of Goldman Sachs, says: “I still do not have a firm stand on this issue”.
However, virtual currencies are a reality. The growth of Bitcoin has also attracted the growth of other digital currencies. Utilizing this success on the internet is booming a new financial product, the so-called ICO.
But what do central banks think about bitcoin?
US: Critical Concern
The Federal Reserve investigation for cryptocurrency is in its early days and has not been clearly enthusiastic about the idea of a central bank’s response to bitcoin. Jerome Powell, a board member and appointed chairman, said earlier this year that technical issues remain with technology and “governance and risk management will be critical”. Powell said there are “meaningful” challenges to a central bank’s cryptocracy that privacy issues may be a problem, and private sector alternatives may hamper work.
Euro Zone: Like tulip bubbles.
The European Central Bank has repeatedly warned the risks of investing in digital currencies. Vice President Vitor Constancio said that Bitcoin is not a coin. It is a “Tulip”, – alluding to the 17th-century bubble in Holland. His colleague Benoit Coeure has warned the unstable value of bitcoin and links to fiscal evasion and crime, pose great risks. President Mario Draghi said that the impact of digital currencies on the eurozone economy was limited. It did not pose a threat to the monopoly of central banks for money.
China: Read to embrace the technology.
China has made it clear. The central bank has full control over crypto-currency. With a research team set up in 2014 to develop digital money, People’s Bank of China believes they are ready to embrace technology. But it has struck down private digital broadcasters, stopping bitcoin and others trading. While there is no official start date for the introduction of digital currencies, authorities say the digitality could help improve payment efficiency and allow more accurate currency control.
But who invented Bitcoin?
The mysterious man known as Satoshi Nakamoto, who is believed to be the inventor of Bitcoin, may become the richest person on the planet. Ahead of billionaires Bill Gates and Jeff Bezos, according to the Forbes magazine list. The steady increase in the price of cryptocurrencies can turn Nakamoto into the world’s first trillionaire.
According to media reports, Nakamoto is believed to have over one million Bitcoin and he has never spent any single currency.
The identity of Satoshi Nakamoto, a nickname for the author of the research paper that conceived Bitcoin about nine years ago, remains a mystery. To date, no one knows who he is. His name appears in the original document which proposed an electronic cash system.
There have been at least four people named as Satoshi Nakamoto. Newsweek said that a 64-year-old Japanese living in California named Dorian Satoshi Nakamoto could be behind Bitcoin.
But, he had denied the report. In 2016, Craig Wright, an Australian entrepreneur, claimed he was the founder, but he was not believed. Billionaire Elon Musk denied rumors that he was the mysterious inventor of Bitcoin. A former practitioner in SpaceX has suggested that “Maybe Satoshi is Elon” because of his knowledge of the economy and cryptography.