KUWAIT CITY, Sept 23, (KUNA): Since launch in 2008, the bitcoin cryptocurrency has been hailed as the gate for future transactions not limited by the obstructions facing its paper counterpart.
Despite the promising premises, the digital nature of bitcoin transactions have made it a bit difficult to govern the cryptocurrency, leading to a bit of doubt regarding its survival in an ever-changing and shifting global economy.
Speaking to KUNA, several experts provided a thorough insight into the mechanism of bitcoins and how this digital currency, which is facing a tough situation in recent weeks, will become the banknote of the future.
Dr Aouni Al-Rashoud, advisor at the Arab Planning Institute (API), said that bitcoins attracted investors due to its digitally encrypted nature, a positive and negative aspect considering that some individuals would use this quirk for illicit purposes.
Dr Al-Rashoud said that the bitcoin was mainly created as a digital tool to cut out fees given to “the middleman” and it was also formed to enable direct peer-to-peer transactions.
Bitcoins could be used in various transactions and even in smaller deals such as buying gifts online, purchasing books, and so on, said the advisor.
He revealed that only the US and Germany have approved of bitcoins as a currency, which is a positive support by the two economic powers.
However, some countries such as China, Russia, and others completely prohibited its use because the cryptocurrency might be used for criminal activities such as selling drugs and others.
On the opposite side of the coin, Dr Al-Rashoud indicated that the increasing exchange rate of the bitcoin, which reached USD 5,000 for one bitcoin more recently, might put-off investors especially if they have no concrete idea of what occurs during transactions.
Giving a more detailed history about the bitcoin, digital currency expert Ghanem Al-Otaibi said that the creation of the currency came as a result of the global economic crunch in the late 2000s.
The first official transactions was in May of 2010 which was known as the pizza incident, said Al-Otaibi, explaining that as the story goes, it appeared that a British citizen called a pizza parlor in the US asking for a meal for an American citizen.
The order cost around 10,000 bitcoins (USD 40 million in today’s money) making this the most expensive pizza meal ever ordered, said Al-Otaibi.
Regarding the Massachusetts Institute of Technology’s (MIT) bitcoin core network, Al-Otaibi said that the developers at the prestigious institute are the only ones allowed to touch the bitcoin programming code.
One bitcoins equals 100,000 million Satoshi, which is the building block of the cryptocurrency, indicated Al-Otaibi, adding that the block’s oriental namesake originated from Satoshi Nakamoto who is believed to be of Japanese ethnicity but there are no concrete evidence in this regard.
He went on to say that, the roof production for bitcoins was at 21 million; however, the actual global production number might be around the range of at 16 million bitcoin. More on the inner workings of the bitcoin, member of the teaching staff at Public Authority for Applied Education’s (PAAT) Business College Abdulrahman Al-Farhood said that the bitcoin is immune to modification by amateur programmers.
Explaining the bitcoin dealing system, Al-Farhood said that the blockchain scheme provides a number of block puzzles and sometimes, mathematical equations, which if solved, will allow users to contact each other to strike a deal.
Al-Farhood revealed that in an effort to provide an international context for the cryptocurrency, a bitcoin embassy was established in Amsterdam, the Netherlands, by the government to encourage users to hold conferences and workshops with the promise that the secretive nature of the events will remain intact.
The academic also indicated that there were around 20 platforms around the globe dealing with bitcoins.
Arguments over the validity of the bitcoin as a major economic force might continue for years to come, but it is most certain that the cryptocurrency has made an impact and it is an evolutionary step towards a digital economic future.