Coyuntura&Análisis
NewsExtra What about Bitcoin market? Bitcoin is a type of currency that is created through internet and it is used to buy and sell things on the global net (some companies accept this sort of currency). It is not required to use banks or other institutions in terms of transferring this kind of money to other users. Anyone can create Bitcoins using a computer. The most interesting aspect about the creation process, is the fact that it requires to solve a mathematical problem to get a “block” of Bitcoins. Once a person has solved the problem, the system generates a code, which acts as a coin (Bitcoin). It is like a game, when you are a miner trying to get gold (Bitcoin). The only way to trade Bitcoins between sellers and buyers of this “currency” is through the electronic platform. There are some aspects to bear in mind when talking about Bitcoins. First at all, a Bitcoin is not a real coin, it is only a representation of electronic currency, so, there is not any central bank backing such a currency. Although, some influential financial authorities around the world have been pointing out one important aspect to this regard (the FED and the Bank of Japan): there is not any country with jurisdiction over this “currency”. It would be necessary to create some rules in terms of protecting people and institutions when using Bitcoins. How does it work? The value of each Bitcoin is set by the market, a market where buyers and sellers use this virtual currency to trade on a daily basis. To buy or sell Bitcoins, it is require to solve a very difficult mathematical problem; the answer is composed by 64 digits. Once the problem has been solved, the “miner” (buyer or seller) obtains a block of Bitcoins and also, a reward is gained (some units of Bitcoin). Every day, the maximum amount of Bitcoins that could be obtained in the market is 3.600. Until now, roughly 11 millions of units of Bitcoins have been created, and the maximum number of units that could be created, in total, is 21 million. Today, the market of this weird currency is worth about USD 7 billion. What’s going on right now with Bitcoin? Basically, on February 7th, the most important Bitcoin-trading web site (Mt.Gox) was shutdown suddenly, without any warning. Some unofficial sources suggest that Mt.Gox has 600.000 users around the world, people from United States, Great Britain and Japan. The same day, the withdrawals were halt, which means that many people today have millions of dollars captured in a virtual account. This situation has generated fears in many of those users. Many others believe that this is a little problem and that there is no reason to be worried about the stability of the Bitcoin market. In fact, other six platforms (Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle) that make possible Bitcoin trading, have taken some distance from Mt.Gox, stating that “This tragic violation of the trust of users of Mt. Gox was the result of one company's actions and does not reflect the resilience or value of bitcoin and the digital currency industry”. They also remarked that “As with any new industry, there are certain bad actors that need to be weeded out, and that is what we're seeing today”. The current situation with the Bitcoin, forces the reflection about some important aspects related with currencies. The value of any currency is not located in its physical form or structure; on the contrary, the main value of any currency is the trust and faith that people, institutions and governments have on the issuer of such a currency: a central bank. In our case, the Banco de la República. Second, all the investments have their risks, the Bitcoin is not an exception. As expressed recently about this virtual currency: “If you buy bitcoins, you should buy keeping in mind that the value could be zero the day after”. Finally, some concerns have been arising about the illegal uses of Bitcoin, for example, in money-laundering activities. This is very important specially because there is not possibility of tracing the historical movement of such a currency, due to the fact that it is created individually through internet and protected (using cryptography techniques) for the rest of the world, including some financial authorities.
Facultad de Estudios Internacionales
6
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