The NYU Dispatch

The layman’s guide to cryptocurrency and bitcoin

Talking about cryptocurrency is not new. It is already a household name worldwide. At the same time, we can’t talk about cryptocurrency without mentioning Bitcoin.

Created in 2009, Bitcoin is a digital currency introduced as open source software by an MIT student named Satoshi Nakamoto. There is much speculation as to whether Satoshi is an actual person, or a collection of individuals using a pseudonym. Bitcoin are minted by a process termed mining, in which specialized computer hardware complete complex mathematic equations and are rewarded with a block of bitcoins. This process takes about 10 minutes and the current block rewards 25 bitcoins. The block reward will be halved to 12.5 bitcoins in 2017 and again approximately every four years thereafter. By 2140 there will be roughly 21 million bitcoins in existence.

Bitcoin is built on the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic grouping. Bitcoin uses cryptography, or mathematical equations, to control the creation and transfer of money, rather than relying on governments and central banking authorities. Transfers for loans, sales, purchases or any other methods of payment can be processed by anybody, using a desktop, smart phone, tablet, or laptop. This is all possible without the need for a financial institution to act as an intermediary or recording agent.

How does Bitcoin’s value grow?

Answer: There are many factors which determine the value of Bitcoin, below are the main two factors which effect its growth once launched into the open market:

  1. One of the factors is Usability of the coin – Bitcoin has over 250’000 merchants, the more Bitcoin is accepted and worldwide used the more its value increases.
  2. Supply and demand- Only 21million Bitcoins can ever be generated, however the demand is increasing. This is having a positive effect on the value of Bitcoin. There are other factors that influence the price of Bitcoin, below I will state a few Government regulations, media influence, more acceptance, technological changes and advancements, endorsements.

Is Bitcoin the only digital product?

Answer: No! Bitcoin was the first. Since 700 other digital currencies have been created and are globally used/accepted. However, Bitcoin is the GOLD standard of digital products. It is the one which holds most credibility. In order to purchase any other digital currency, one must usually purchase Bitcoin first.

Presently, there are millions of people worldwide who are still in the dark as to what bitcoin and other digital currencies are all about, for this reason, platforms like Extra Credit were created to empower everyday people with the knowledge to invest and manage their own cryptocurrencies with ease. Cryptocurrency is rapidly becoming more mainstream in online transaction, and soon more services will arise which integrate cryptocurrency and the blockchain into our everyday lives.

This article was contributed by fellow NYU students. If you would like to make a contribution to the NYU Dispatch, please email us.

One thought on “The layman’s guide to cryptocurrency and bitcoin”

  1. “Cryptocurrency is rapidly becoming more mainstream in an online transaction, and soon more services will arise…”
    This sentence does instantly get us all excited for whatever is coming next. The article is a constructive and informative piece, short and simple which will definitely help numerous individuals to genuinely perceive how it all started and the current market position of the multiple cryptocurrencies.
    Bitcoin marked the promising beginning of a modern era in the always stable monetary system, with cryptography, smart contacts, and digital signatures ruling the online transactions.
    However disruptive the market may deem this newest development, by now, we all can perceive the imperative necessity of such a secured and private financial system.

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