Is Bitcoin a currency?

bitcoin

The answer to that question depends on who you ask. One thing’s for sure, it’s not a currency in the sense that we know it.

Bitcoin is classed as a ‘cryptocurrency’ and most people would have heard of it in one way or another but there are in fact hundreds of crypto currencies which have varying degrees of legitimacy, value and success.

Bitcoin (BTC) enjoys around 45% of the total market and it’s volatility and recent staggering rise in value has made news and divided opinion across the world. To the layman it is very hard to understand because it is not easy to spend as a normal currency, in other words you can’t go to your local supermarket and pay for your weekly shop with it  (although there are some merchants that will accept it as payment it is not common).

Production

Bitcoins are not printed or minted in the traditional sense and this is another source of confusion for most people. Each bitcoin comes into circulation by a complicated mathematical process using powerful computers called ‘mining’. They take considerable time to produce and there will only ever be a set amount produced in the world.  It is beyond the wisdom of the author to explain the process but a very good guide to the process can be found in this excellent  Wikipedia Bitcoin article.

bitcoin mining diagram

Exchange Rate

Bitcoin like all other cryptocurrencies and all regular currencies has an exchange rate which is dominated by demand and supply and this is why some commentators are calling it the new Gold. You can buy it, it has value which seemingly is rising, there is limited supply and it is not a regular form of payment. At the time of writing 1 BTC was worth around US$14,190.00 or € 11,951.00, bearing in mind that this time last year 1BTC was worth $930.00 that is a rise in value of over 10 times! You can find a complete guide to every cryptocurrency and the live market values at coinmarketcap.com

For live market values of normal currencies visit compareholidaymoney.

Future

What the future holds for Bitcoin or any other cryptocurrency is, it’s fair to say, uncertain. There are some leading financial figures in the world that call it a ‘Ponzi scheme’, a fraud, a bubble waiting to burst and pour scorn on anyone who makes to invest in it. On the other side, some financial institutions are looking to offer bitcoin as investment as well as many millions of small investors around the world.

If you are lucky enough to have had some bitcoin for more than a few months then your investment would certainly be better than any savings account. However, there is also that nagging possibility that in a few months time it could be worth nothing; who knows, but watch this space………………… !

Posted by Graham Morley

Graham Morley

Graham is the Business Development Manager for Compare Holiday Money.

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