Bitcoin is the most well-known virtual currency in the world, but it is far from being the only one: there are already more than 1,300 and there are no limits, anyone can create their currency. But “bitcoin” was the first: it appeared in 2009 and was the queen in 2017, with an explosive appreciation. The year started to be worth a thousand dollars, or close to 840 euros, and on the 18th of December it reached its peak, with each currency worth 19,511 dollars, about 16,350 euros. In the last year it increased by 1800%. It stumbled in 2018, on the first day of the year investors recorded losses of 4.8%, but remains on the podium as the virtual currency with the most value in the market.\
What supports this appreciation? An increasing demand for a currency with limited issuance, low transaction cost and totally independent, for better or for worse. But let's go by parts.
Who can issue virtual currencies?
Any person, entity, company or country. It is enough that you have the means to do it, that is, a super powerful computer, knowledge and a lot of energy to consume, in the case of the first currencies such as “bitcoin”. This currency is created by algorithmic computation - to create additional units you need to decipher complex equations. “Blockchain” is the name of this innovative technology, which is at the base of cryptocurrencies, and which can be compared to a record book, inviolable, where all transactions and coins in circulation are pointed out. It is the “blockchain” that ensures that currencies are not duplicated and protects investment.
There is yet another word to learn in this market: mining. Each currency has a code - it is encrypted with its own problem or puzzle. Thousands of computers around the world are incessantly mining, night and day, voluntarily. The first to decipher a given equation inscribes that code or "block" in the inviolable chain of the "blockchain" and is rewarded with a sum of the virtual currency in question.
Does virtual currency have advantages?
Whatever the future of cryptocurrencies, there is consensus that “blockchain” is an asset, a revolutionary technology, with diverse applications, that is here to stay. The absence of inflation is another added value. Contrary to what happens with national currencies, where, whenever necessary, governments and / or central banks can pour more coins into circulation, here the issue is limited to 21 million units (the “blockchain” only allows to create up to 21 million coins, or codes), which avoids the risk of inflation. Coinage depends on the volunteering of millions of anonymous people around the world and their computers - for this work they are compensated with units of the currency. Therefore, transactions are automatic and do not require commissions charged by banking and other associated costs.
Who is the father of “bitcoin”?
It is called Satoshi Nakamoto, but this is just the pseudonym of the investor who in 2008 published a nine-page document presenting the concept of virtual currency. The identity of this computer programmer remains one of the mysteries of today: some say that he is a man, others point to a group. Bitcoin emerged a year after the “subprime” crisis, originating in debt and banking. The world was looking for alternatives and this currency appeared, independent of central banks and governments, without transaction costs or intermediaries, without nationality - a world currency. Nakamoto never introduced himself or his collaborators. In the early years it remained active, in forums and through e-mails, until 2011, when it disappeared. It is estimated that you have in your possession about one million "bitcoin" s ", that is, 5% of the currencies that may exist. The United States has just over 4% gold, a metal that supports the dollar, and this is the largest reserve in the world. Why is this concentration of “bitcoin” s in the possession of a person, to be confirmed, relevant? Because if it is dumped at once on the market it can cause the currency to crash. For now, it does not appear that the founder of “bitcoin” is interested in identifying himself. A few years ago a Japanese man, with the same name as the pseudonym, was mistakenly identified as the author of the coin and was literally chased by the media. Some names are identified internationally as possible authors, but none is official. An Australian man admitted to being the creator of “bitcoin”, but that claim is disputed by the “online” community.
Who accepts bitcoins? What can I buy and where?
The overwhelming majority of countries prohibit transactions with virtual currency, but in Japan, for example, “bitcoin” has been a legal means of payment since April 2017. This is also one of the countries with the most favorable legislation for virtual currencies. The Virtual Currency Act recognizes that cryptocurrencies are assets that can be used to make payments and that income from purchases and sales can be taxed. Cryptocurrency is accepted in retail chains, airlines and energy companies. There is even a technological company that already proposes to pay part of the wages in “bitcoin” s, starting in 2018, to whomever it prefers. But Japan "is not only betting on" bitcoin ", it mainly wants to lead and does not want to discourage the development of technology", defends André Gouveia, from DECO. The country is interested in "launching Jcoin, a digital version of the yen, also has a joint venture" with the European Central Bank to find more uses for the blockchain ". Russia began by threatening criminal cases with those who traded “bitcoin”. Then, as a measure to fight money laundering, it announced the legalization of several cryptocurrencies by the end of 2017. Germany also already accepts private transactions with “bitcoin”. On the margins of territorial borders, many companies have already announced that they accept payments in “bitcoin”. EBay, the largest electronic trading platform, admitted in December that it is seriously considering accepting “bitcoin”. In forums and social networks there are those who advertise deals with payments in virtual currencies, in Portugal there are already properties with the option to pay in cryptocurrencies. But virtual currencies are not yet accepted in stores. One of the problems is that the value is so volatile, sometimes suddenly. Nor can they be deposited in a bank. Or they put themselves in an “online” wallet, provided by the exchanges that trade the coins, or in memory devic
After all, is it a coin or not?
As it is virtual, it is easy to transfer and, thanks to the “blockchain”, it is very difficult to fake. These are two good reasons to consider “bitcoin” a currency. But does it fulfill the functions of a currency? In theory yes, but in practice not yet. It is still accepted by a very limited number of economic agents and laws are lacking to regulate transactions. Who oversees? We are in no-man's-land. Banco de Portugal warns that they are not subject to any authority or financial system. However, they cannot be ignored, not least because they are being accepted as a bargaining chip and traded on "online" exchanges. In 2018, “bitcoin” is expected to start trading on Nasdaq, the investment can also be made through complex financial products or shares of companies that accept “bitcoin” payments. We questioned the Securities Market Commission, which washes its hands as well. The regulator of the exchange reminds that virtual currencies are not considered safe, so transactions involving these products may be outside the regulated space, therefore, without protection.
cryptocurrencies are the future?
In the forecasts for 2025, several banks, investment houses and economists have put in mind that this will be the year in which the bubble of cryptocurrencies, and especially of “bitcoin”, will burst. The most recent theory is that even for crime, “bitcoin” is no use because it has become so well known that criminals now take refuge in other alternatives. Those who focus more on “bitcoin” s argue that the currency will face serious technical problems this year and the competition of the most recent currencies, some of which are already gaining ground, such as “ethereum” and “ripple”. Another open question is regulation. Deutsche Bank says the “bitcoin” crash is one of the biggest risks in the markets in 2018. Saxo Bank announces the rise of "bitcoin" s "this year up to 60 thousand dollars, that is, it should multiply the value 3.5 times, and then drop down to a thousand dollars. Russia and China should drive investors to despair, argues the Danish bank, Moscow will launch its own virtual currency and the Chinese will ban mining because of energy costs and then also launch their own currency. The Nobel Prize for Economics, Robert Shiller, predicted the dot-com bubble between 1997 and 2001, the bubble of the American housing market in 2008 and has now announced that the next one will be “bitcoin”. Shiller believes the currency is a risk to global finance and could be the source of the crisis that many believe is coming. We just need to know when and how.
