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Evan Kaminski

Professor Loudermilk

English 1201

19 March 2019

Bitcoin Essay

Ever since the early months of 2009, the popular online cryptocurrency, Bitcoin,

has been making headlines. There have been many ups for the newly found company,

but there have also been many downs. People do tend to stray away from new ideas

that make them feel uncomfortable. But after some research and learning, it should be

something you wish you had learned about when it first came out! Bitcoin should be

used and looked at in a more positive way because it shows signs of causing growth in

the United States, has a very strong economic boost capability, and has a potential to

change the way the world uses money forever.

So let me take you back, all the way back to 2009. It was January, actually

January 3rd to be exact. Bitcoin had just completed its first transaction. They were still

in their testing stages before actually releasing the Bitcoin. Then it all changed on

February 6th. This is the day that bitcoin was first released to the stock exchange

market.

It hit the market at only 0.0025 cents for one bitcoin. Less than one cent a share!

To give you an example of how cheap this was, you could buy 10,000 shares for only

25 dollars. Today, just for one bitcoin, it is priced about 4,000 dollars a coin. If someone

was to sell 10,000 shares today at 4,000 dollars a piece, they would walk away with 40
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millions dollars.

This brings me to my first point about bitcoin; it shows signs of economic growth

in the United States. To put this into simpler terms, it can have such a positive effect on

the economy if more and more people just knew about what bitcoin was really about

and invested in it. Bitcoin is one of the easiest things to invest in. Compared to other

stocks, bitcoin does not depend on another outside 3rd party source to control the price

of it. The price of a bitcoin strictly deals with how much people are going to pay and how

the economy is doing.

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So I wanted to use these two graphs I found to basically support what I was

saying and show instead of just tell. So rule of thumb with how well the stock market is

depends on the Dow Jones. As you can see from the first graph, which illustrates the

course Bitcoin took from the beginning of 2017 to the end, peaks at the December 17

area. The second graph, which shows the course of the Dow Jones market from 2017

to 2018, illustrates how there was a steady rise from 2017 and peaks at beginning of

January. Looking at the bitcoin chart, you can see where it peaks then also starts to go

down.

There is a direct correlation between bitcoin prices, Dow Jones market, and how

the economy is doing. When the bitcoin started to steadily rise in October 2017, the

Dow Jones begins to steadily rise as well. When the bitcoin peaked and started heading

down, so did the Dow Jones. Both of these graphs can give you a good idea on how

bitcoin really can affect the economy as a whole.

Another big way bitcoin can really affect the economy is by eliminating the
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middleman. What I mean by this is simple basically when buying, selling, or trading

stocks, you have to go through a middle man, like E-Trade. What E-Trade does is they

take a small percentage of your trade. So if they took 10% of your 100 dollar trade, they

would take 10$, leaving you with less money.

This can affect the economy by causing more money to be in circulation, which

we all know that more money people are spending, the better the economy is doing.

Now a counter argument to this could be about eliminating the middleman service,

which would be causing them to get no money. Well, they are simply funded from the

high rates they charge and earning people’s money. So basically if they get rid of the

middle man, it is almost like not even having it at all.

My next point I would like to discuss and talk about is how Bitcoin has a huge

potential for an economic boost. What I mean by this is based of what I showed you

previously, it has a chance to change the economy completely. Just by people investing

in Bitcoin, the Dow Jones can change completely. Imagine if bitcoin was to replace the

dollar bill!

So the bitcoin has a few ways it can cause the economy to have a sudden boost.

One of the major ways this could happen is by simply investing. So it all kind of ties into

a supply and demand kind of deal. What I mean is let’s say bitcoin is worth one dollar

and you are the only person to own bitcoin. If someone wanted bitcoin too, you could

sell yours to them for 2 dollars. This could cause an endless chain of people buying and

selling, which essentially cause more money to start circulating.

Another way bitcoin can cause a major economic boost is by becoming more
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popular and acceptable. One source I found stated only 99 big and small name

companies. As reported back in 2012, there were about 30 million companies /

businesses in the United States. That means roughly only 0.0000033% of businesses in

the entire United States accepts bitcoin. Accepting bitcoin at more and more big name

businesses could cause bitcoin to spread and people would start to getting into it.

Now a counter argument to that point could be about the fluctuating prices of

bitcoin. For example let’s say bitcoin is prices about 5,000 dollars a coin, and someone

wanted to buy a 20,000 dollar car. They would give the car dealership 4 coins and be

done with the transaction. Well let’s say overnight bitcoin drops to 2,000 dollars a coin.

This would mean the dealership really just sold a 20,000 dollar car for 8,000 dollars.

This could also be vise versa. Bitcoin could explode and be 10,000 dollars a coin, which

would mean the dealership just made 20,000 dollars profit. It really all boils down to if

you think it is a smart investment and trust the market.

My last point on why bitcoin has the potential to cause a huge economic boost is

the way the world is changing. Let’s face it, we all live in a technologically advanced

world. People now carry around credit and debit cards compared to old ways of carrying

around cold hard cash. The younger generation of adults is moving more toward a more

technological based world, so why should the money not do the same?

An article I found from factmonster.com stated that roughly everyday, 38,000,000

notes or bills are printed. 48% of those bills alone are one dollar bills. It costs roughly

4.9 cents to make a one dollar bill. So 18,240,000 one dollar bills printed daily costs

893,760 dollars to make daily. In one year, that comes out to 326,222,400 dollars spent
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on just one bill! It is tough to compare it to the bitcoin because prices can and will move

around, but that just goes to show you how expensive printing money can be. So why

don’t we just try to move in a more technological way and try to save money?

This brings me to my last and final point, which is how bitcoin has the potential to

change how the world uses money forever. Like I stated before, the world is moving

everything to be more technologic and does not show signs of stopping. But what if

everyone got on board with bitcoin? The way money is valued at could change the

world forever.

So currently as of the last quarter of 2018, there were 32 million blockchain

wallets. What a blockchain wallet does is allows you to edit manage your bitcoin from a

simple wallet, which is also very secure. To put into perspective how many people use

bitcoin in the world alone, it is only .004%. But imagine if that number or percentage

was changed? Imagine there being 100 million or even 1 billion users for bitcoin!

Now I do understand that Bitcoin is really all about chances. It is all supply and

demand like I have stated before. But looking at the past, all the way to current day,

Bitcoin has gained interest like crazy. When bitcoin first came out, almost nobody was

investing and it was almost worth nothing. Compared to today, it has roughly 32 million

users! Over a 10 year span from when bitcoin was first created, it has gained the trust of

32 million people, and given tons of more people curiosity. Think about it from a

business perspective. No business just starts and instantly becomes a success hit. It

takes time to get bigger and popular, and takes time for people to trust and believe in it.

So now is time to get into some other reasons bitcoin should be used more often,
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trusted by everyone, and way more popular than what it is. With every business or idea

even ever invented, there is always a good side and a bad side. One major reason why

Bitcoin should overall be more trusted is how secure it really is. A study shown from

CNN says that back in 2014, roughly 47% of the entire United States populations

banking information had been hacked or exposed. Bank accounts really are not as

secure as many people think they are. All they are protected by simply is just a

username or special code you set up, and a password. Once a hacker can successfully

breach a banks website, let's say Bank Of America, they now have access to

everyone’s information.

Comparing this to bitcoin makes them seem like they are the most secure way to

safely hold your money. So like I stated before, bitcoin is held in a bitcoin wallet. Your

bitcoin wallet is secured by something called private hidden keys, which are almost

similar to an encryption. A private key is an encryption that protects you from getting

your information easily taken. If a hacker really wanted to take your bitcoin, they would

have to go through almost endless amounts of walls and algorithms that protect your

very wallet. What is nice about the bitcoin wallet is that they are all individual to each

person. There information is all not stored in one database like bank information is.

Essentially, the only way someone could really easily get your bitcoin information is if

you just simply gave it to them, or did not back up and protect your wallet.

Now a counter argument could be about how unsafe online currency potentially

could be. A place where bitcoin is commonly used, or any online currency for that

matter is called the deep or dark web. What the dark web is a part of the internet that is
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only accessible to you if you go through a series of downloading softwares. It is called

the dark web because it is a part of the internet that is hidden and not many people

know about. Think of it the whole internet as an iceberg. The stuff we see as everyday

people is only the tip of the iceberg, which is about 25% of the entire internet. The other

75% remains on the dark web.

Really, one of the only main reasons an online currency like bitcoin is stolen is by

scammers and not so much hackers. The way to pay for anything on the dark web is by

using online currency, Bitcoin being the most popular. Why you ask? Because it is

untraceable. Once you send bitcoin away, it can not be retrieved or recovered,

compared to real money. If you get your bank account hacked or you get scammed,

most of the time your bank can help you get your money back. But with bitcoin, once it

leaves your account, it is gone.

A study from CNN shows that in 2017 alone, over 1.1 billion dollars in

cryptocurrency was stolen. This all came from the dark web itself. But only 10% of that

money stolen was bitcoin, and another 11% came from ethereum, which is bitcoins little

sibling. So that means that from the whole other 79% that was stolen, it was all smaller

cryptocurrencies that these scammers were asking for. The article claims that “Bitcoin is

apparently easy to steal.” This is a falsifying claim because like I had stated previously,

bitcoin is very challenging to even get your hands on to steal. The majority of bitcoin, or

even cryptocurrencies that are stolen, all come from scams on a part of the internet that

is not monitored. This is the same as someone trusting a fake IRS letter they get in the

mail and sending them cash. It is simple common sense. If you are not smart and
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careful with your money, it can and will end up stolen.

Now is time to talk about the bad side of bitcoin. As many people know,

everything good in this world always has a bad and an ugly. So one of the worst things

about bitcoin, like I stated in my previous counter argument, is how you can lose bitcoin.

Bitcoin is one of the safest cryptocurrencies out there, but once you send Bitcoin or you

get it taken from you, it is not retrievable. It can not be traced either. This one of the

biggest concerns users, buyers, and investors.

Imagine yourself being a bitcoin investor. You have been saving and investing for

quite some time now and you find what you're looking for and are ready to spend your

bitcoin. If someone tricked you into being a fake company and you send them all of your

bitcoin, you can not retrieve it back. It is not like when you send money and the bank or

police can help you get it back. Once it is gone, it is gone forever.

Now time for the ugly side of bitcoin. So bitcoin is mined. What I mean by mined

is there is a process of collecting new bitcoin. No it is not physically mined like coal. It is

a process of people using computers to solve a computational problem which allows the

miners to chain together blocks of transactions. That was quoted from my source

buybitcoinworldwide.com.

So as you think of using anything now a days, it all comes from using electricity.

That is the main source now a days that really almost powers everything connected to

an outlet. So the reason this is the ugly side of bitcoin is how much electricity is actually

used. As stated on hackernoon.com, “...60 metric tons of CO2 are emitted during the

process of making one bitcoin block.”. They also stated that “this means 30 kilograms of
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carbon are emitted, which is also equal to 3.3 gallons of gasoline. To put into

perspective on how many metric tons are mined, it is simple math. On average, there

are 1,800 bitcoins mined daily. There are roughly 12.5 bitcoins in one block. That comes

out to 144 blocks daily. That means almost daily, 8,640 metric tons of CO2 are

released! Going even farther with the numbers, this comes out to 4,320 kilograms of

carbon released every day. If you take into consideration how damaging that really is to

the environment, maybe you would think twice about bitcoin.

In conclusion, after doing extensive research on the topic of bitcoin and online

currencies, I have learned quite a bit. One thing I learned was bitcoin does interest a lot

of people. But what comes with that is a majority of them do not know much about

bitcoin. I think bitcoin should be used and looked at in a more positive way because it

has a very strong economic capability, shows signs of causing growth in the United

States, and it has a potential to change the way the world uses money. After reading

this, do you look at bitcoin in a different way?

Works Cited

10103353622450557. “Bitcoin: The Good, The Bad, & the Ugly.” ​Hacker Noon,​

Hacker Noon, 2 Nov. 2017,

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hackernoon.com/bitcoin-the-good-the-bad-the-ugly-83f196e6e560.

Frankenfield, Jake. “Blockchain Wallet.” ​Investopedia,​ Investopedia, 12 Mar. 2019,

www.investopedia.com/terms/b/blockchain-wallet.asp.

Higgins, Stan, and Stan Higgins. “From $900 to $20,000: Bitcoin's Historic 2017 Price

Run Revisited.” ​CoinDesk,​ CoinDesk, 30 Dec. 2017,

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“How Many Bitcoins Are There?” ​How Many Bitcoins Are There? How Many Left to

Mine? (2019)​, www.buybitcoinworldwide.com/how-many-bitcoins-are-there/.

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ey.

Jordan Tuwiner Last updated February 8, 2019. “What Is Bitcoin Mining and How

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www.buybitcoinworldwide.com/mining/#what-is-bitcoin-mining.

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www.buybitcoinworldwide.com/mining/#what-is-bitcoin-mining.

Long, Michael Carr. “How To Invest Your Money In 2018.” ​Seeking Alpha,​ 30 Nov.

2017, seekingalpha.com/article/4128725-invest-money-2018.
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Feb. 2019, en.bitcoinwiki.org/wiki/Bitcoin_history.

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