Why is Bitcoin is Quietly Making Noise During the Corona Virus Epidemic?

A Brief Look at What Bitcoin is

Explaining Bitcoin to the everyday person.

What is Bitcoin?

Satoshi Nakamoto is the name used by the believed creator or creators of Bitcoin, the first digital currency that evolved as a result of the market crash in 2008. No one knows who this person or persons are since they have never been identified to the public. Satoshi created the Bitcoin white paper and later the cryptocurrency itself. Ten plus years later, the awareness and demand for Bitcoin increases. I will not go into the specific details on Bitcoin itself but focus on what is Bitcoin as well as the increase in this cryptocurrency in 2020.

Bitcoin is just one of the thousands of digital currencies under the cryptocurrency umbrella. Currently there are over 5,300 cryptocurrencies with various objectives as they all have a unique purpose.

Personally, I am not a tech guy or fully aware of the technological details on Bitcoin. I have spent more than half my life investing. My college major was political science so that is nowhere related to computers, technology or engineering.

So why did I get involved with Bitcoin three years ago? For many people who enter this space, it’s to learn about this new currency which could take over the fiat currency we use. Others get involved in Bitcoin as an investment. I lean more toward the investment part of Bitcoin.

A few years ago, you may remember Bitcoin reaching $20,000 for one coin. Currently, Bitcoin is sitting at $6,820, or 65% less, at the time of this writing.

A few people mentioned getting involved with Bitcoin, but it didn’t make sense. I couldn’t understand how this digital currency was worth so much and you could not taste, touch, or see it. At the time I was trying to really understand Bitcoin which was worth $3500. A few people mentioned Bitcoin as it was under a network marketing platform. What hurt them was they didn’t take the time to explain to me what exactly Bitcoin was. I think these people were into the company more for the network marketing part of the business rather than Bitcoin itself. As you know the more people who join you, the more money you receive as you join their team.

Many of these companies pushed me away from truly understanding Bitcoin until I watched a few videos that broke down Bitcoin and its true intent. There is also a Netflix documentary called Beyond Bitcoin that explains Bitcoin which you should check out.

Is Bitcoin an investment or currency?

You may have seen the gold-colored Bitcoin images of the actual coin in pictures or on t-shirts. There is no physical Bitcoin as these are only very good replications of Bitcoin since no physical Bitcoin exists.

Bitcoin is a unit of currency created by mathematical problems and operate independently of a central bank. So the banks we know do not have any control of Bitcoin as they do with fiat currency. This has scared banks for years and they are only slowly coming around to it now.

The CEO of JP Morgan Chase, Jamie Dimond, blasted Bitcoin a few years ago.

Then two years later, Chase is one of the leading financial institutions by creating their own digital currency. The JPM coin is expected to be used as a stable coin mimicking the dollar for transactions.

Currently, many banks will not do business or create accounts with Bitcoin in the company name. Only a few banks will allow this. I know one person who was turned down many times to open an account with his LLC that had cryptocurrency in its name. Eventually, he found a bank that would do business with him.

This digital currency scares banks and federal institutions because Bitcoin would make their currency obsolete. Only recently some countries have adopted Bitcoin as another form of currency. Countries such as South Korea, Japan, Russia, and Iran are welcoming this new currency for their own reasons.

Why is there a Demand in 2020?

Just as Bitcoin was created in 2008 during the last market crash, Bitcoin is seeing a resurgence as economies are bordering similar economic issues today. This interest is a result of the corona virus epidemic that began in late 2019. Cryptocurrency growth has occurred across the world for years, but the demand is only intensifying.

Education on Bitcoin is one reason. As local cryptocurrency meetups, cryptocurrency YouTubers and even financial news organizations promote Bitcoin, this only spreads the awareness on cryptocurrencies.

Some big-name financial institutions are also creating Bitcoin departments as they add them to their financial toolbox for their clients. Several institutions also offer Bitcoin products for investment purposes.

The website Coindesk noted that there was a strong demand for cryptocurrencies in the African markets of Nigeria, South Africa, Zambia and Uganda with thousands of new users. This spike occurred during the 1st quarter of 2020 compared to the 4th quarter of 2019.

The demand was not just in one area but across the world. Exchanges are like banks, but they handle Bitcoin and other cryptocurrencies.

In March, North American exchanges including Coinbase, Kraken and Gemini saw the most in trading volumes. The Bitcoin strategist at Kraken, Pierre Rochard, noted that the exchange saw a 300 percent increase in new users in March.

Demand also increases in countries with unstable economic conditions. In Latin America, Argentina was recently on the brink of default. Other countries include Lebanon, Ecuador, and Venezuela.

In Asia, the demand for cryptocurrencies was increasing as well. China is encouraging other countries to work with local currencies instead of the dollar. The Shanghai Cooperation Organization includes China, Russia, Kazakhstan Uzbekistan, Kyrgyzstan, and Tajikistan. China is working to establish its national digital currency.

Traders from these countries sometimes sell their Bitcoin and invest in real estate.

It is similar in the Middle East as they are going a step further by buying real estate investments. Several deals are currently bought in multiple cryptocurrencies from a single Asian buyer.

Investors are buying properties in London, Berlin, and Dubai. Several Middle Eastern nations are willing to accept large amounts of cryptocurrencies in these deals.

Exchanges in Dubai witnessed cryptocurrency trading volumes increase as much as 200 percent in 2020 through March.

Change is happening as some investors rank Bitcoin along with investments like gold or real estate.

Bitcoin is even getting compare to digital gold more often these days.

How does one buy Bitcoin?

As previously mentioned, Bitcoin is sold on exchanges. These exchanges are located worldwide and each country has their own exchanges to purchase Bitcoin.

In the US, there are several exchanges but the largest one in the US is Coinbase. CEO Brian Armstrong and Fred Ehrsam created Coinbase in 2012 which is headquartered in San Francisco, California. Previous co-founder Brian Reeves leftover how the Coinbase wallet should operate. Reeves went to help create Blockchain.info.

Coinbase allows users to buy and sell cryptocurrencies through their bank. Setting up an account is similar to opening a bank account where a driver’s license is used as well as providing personal information, address, date of birth, and so on. Coinbase does its best to secure this personal information from hackers.

Just as a bank or store gets overwhelmed during peak holiday seasons, the same happens with Coinbase during high volume seasons. One example is some transactions may not go through at all when a user is trying to buy or sell cryptocurrencies.

What is Bitcoin halving?

You may hear more news about Bitcoin halving as this big event is coming on May 13. Investopedia states:

Bitcoin and blockchain are a collection of computers, or nodes, around the world that all have Bitcoin’s code downloaded on them. Each of these computers has all of Bitcoin’s blockchain stored on them. This means that each node has the entire history of Bitcoin transactions, making sure no one can cheat the system as every node would see this and not allow it… There are currently over 10,000 nodes, or computers running the Bitcoin code.

Because of the halving, this means future Bitcoins are created but the rewards for the miners, those who create the Bitcoin, are reduced after each halving.

Since there is a limit to the amount of Bitcoin available, this increases the value of Bitcoin itself as more Bitcoin is mined or created. This is similar to using the supply and demand theory. Since there are only 21 million Bitcoin, it is expected all Bitcoin will be mined by 2040 and the price is expected to increase as a result.

What is Bitcoin mining?

Bitcoin mining is the process where people use their computers to help create bitcoins. Bitcoins are created on a blockchain network. Another way to look at this is to compare how Facebook, or another website is developed on top of the internet system. Bitcoins are created on top of the blockchain network. Certain computers are designed with chips specifically built for mining.

Bitcoin mining can’t be compared to mining for gold or other metal so do not confuse the two types of mining. Bitcoin miners solve mathematical problems for creating a bitcoin. When miners solve these mathematical problems, this confirms the authenticity of the bitcoin and they are rewarded Bitcoin as a result.

The use of Bitcoin will only continue to grow as the years go on. Just a decade ago, not much was known about Bitcoin but the curiosity of the digital currency continues to grow.