Bitcoin: What’s all the hype?

Wu He (Courtesy photo/ODU News)
Wu He (Courtesy photo/ODU News)

Blockchain is a revolutionary technology and can be applied to many fields, such as finance, inventory tracking system, healthcare, cybersecurity, education, and contract management, according to Wu He, associate professor of information technology and decision sciences.

Bitcoin is the first successful application of the Blockchain technology. Bitcoin is an online digital currency which operates on a peer-to-peer network.

As a digital currency, bitcoin is not controlled by any government.

However, there is a controlled supply for bitcoins and in theory, the maximum number of bitcoins is 21 million. Bitcoin meets some people’s needs to transfer money online securely without needing a trusted intermediary, such as a bank. Bitcoin is highly valued because of its anonymous nature. Therefore, Bitcoin does have certain values and utility. The high demand and low supply of bitcoin is why the value of bitcoin has gone up so quickly.

The main concern about bitcoin is how much it’s worth. It is hard to predict because it’s only worth what people think it’s worth, He said. Bitcoin is a great example of demand-supply dynamics. Many factors contribute to the recent price surge/drop of bitcoin.

The use of bitcoins is now beyond the black market and is being used for normal transactions. Given present global instability, He said he thinks cryptocurrencies like bitcoins have a future and will likely be around for many years to come.

“The “blockchain” technology behind the Bitcoin has great future potential especially when central banks jointly adopt which could help to cheaply verify the attributes of a transaction,” said John Doukas, professor of finance and W. B. Spong Jr. chair in finance.

A blockchain technology permits a decentralized network of economic agents to agree, on regular intervals, about the true state of shared data such as exchanges of currency, intellectual property, equity, information or other types of contracts and digital assets.

Hence, blockchain is a general purpose technology that can be used to trade scarce, digital property rights and create novel types of digital platforms.

Bitcoin as a currency or investment at the current stage represents investors’ (especially in east-pacific Asia) un-hedged speculative motive. It is a digital, decentralized, partially anonymous currency, not backed by any government or other legal entity (i.e., FED, central bank) and cannot be redeemed for gold or other commodities.

It’s a peer-to-peer network and relies on cryptography to maintain its integrity. Hence, it allows organizations, abhor groups and governments to receive donations and perform business anonymously.

Its future potential as a widely accepted currency greatly depends on whether or not central banks find a way to control its supply, as they currently do with the supply of US dollars, euros and other national currencies.

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