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Economy

World’s Richest Man and Car Maker Driving Value of Bitcoin

Islamabad: The people who are investing in Bitcoin, world’s leading crypto-currency, will always remember Papa John’s Pizza and Bitcoin’s historical relationship. In fact, the first-ever transaction in Bitcoin currency was the deal of payment of 10,000 Bitcoin for two pizzas in Florida, the United States. In this way, Papa John’s Pizza became an essential part of the history of this cryptocurrency.
For the past few weeks, Bitcoin is showing stunning fluctuations in its price as Elon Musk, CEO of Tesla Incorporation, the US-based leading electric car maker and world’s richest man, is driving up and down the value of this most popular and expensive cryptocurrency. Elon Musk became the richest person in the world on Jan, 2021, when his net worth hit US$185 billion and he replaced Jeff Bizos, CEO of Amazon, whose wealth amounted to US$184 billion on that day.
How Tesla’s investment in Bitcoin has boosted its value it can be observed from the fact that these days one Bitcoin is trading in narrow range of US$50,000. On March 5, 2021, value of this currency opened at US$48,500 (Rs 77 million+ if dollar-rupee is calculated at existing exchange rate of 159). On Feb 7, 2021 one Bitcoin was trading around US$38,873, but its value surged to above US$46000, on Feb 9, 2021, when Elon Musk, CEO of Tesla shocked the world by disclosing that his company has invested US$1.5 billion in Bitcoin. He also revealed that very soon Tesla Incorporation, America’s leading manufacturer of electric cars, would start accepting Bitcoin cryptocurrency for selling its automobiles.
With this announcement, investors starting making hefty investments in Bitcoin and its value exceeded US$60,000 on March 14, 2021, far above US$38,873 price benchmark, from where Tesla bought this digital currency. Surprisingly, soon after Tesla’s investment, Bitcoin also set a new record as the total value of this digital currency in circulation hit one trillion US dollars mark for the first time. Nevertheless, a few days later, CEO Tesla Elon Musk issued another statement wherein he stated that the value of Bitcoin was increasing in an abnormal manner. Unexpected spikes in Bitcoin value also shocked everyone in the United States and elsewhere and the American government officials and analysts started raising concerns about unprecedented growth in the value of this digital currency in recent weeks. They also declared this crypto-currency most vulnerable to shocks, frauds, and urged people not to make any investment in it. Consequently, by Feb 28, 2021, the value of Bitcoin fell to around US$45,000, from where it slowly crossed the new high level of US$60,000 in second week of March 2021 and closed around US$55,000 on March 17. Worth to note is that in America, a much hue and cry was raised when the price of Bitcoin crossed average car price (US$44,000) in Feb 2021, just two days after Tesla CEO Elon Musk announced his company’s strategic investment in this digital currency because it worries many in America about manipulation in Bitcoin value and its side-effects on the economy.
Interestingly, so far, the United States, Canada, European Union, Australia, and Finland have made legal trade of Bitcoin and some other leading crypto-currencies. These countries, however, are using their security agencies to ensure this digital currency is not utilized in drug trafficking, illegal trade of weapons, terrorism, and other unlawful activities. Importantly, online trading of this digital currency is being conducted in many countries that have legally banned it. Bitcoin is also being traded on several currency/stock exchanges in the United States and some other countries.
8 Major Crypto-Currencies
More than 1,600 crypto-currencies are being used in the world. However, Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Bitcoin Cash, Ethereum Classic, Zcash (ZEC), Stellar Lumen (XLM), and Bitcoin Satoshi’s Vision (Bitcoin SV) are eight leading crypto-currencies in the world at present. Bitcoin is considered original crypto-currency that was the first-ever digital currency introduced in 2009. In 2013, the United States legalized trading of Bitcoin currency and the US Treasury Department issues guidelines for trading this digital currency. Well before this decision of the US Treasury Department, some States in America had already allowed the use of Bitcoin. Similarly, some other countries also declared this crypto-currency legal, resultantly, its value starting seeing a spike because of massive investment in this currency. When the US government legalized Bitcoin in 2013, the value of this currency was just around US$13 at that time. Today, this digital currency is being traded in the range of US$55,000, after hitting the highest mark of $60,000 in 2nd week of March in 2021.
How to Buy Bitcoin, other crypto-currencies with Fiat currency?
The potential buyers of Bitcoin or any other crypto-currency are required to open their crypto-currency exchange account, update their personal identification information, a method of online payment and a secure internet connection. Common methods of investing in Bitcoin are bank account, debit, and credit cards. Bitcoin ATMs are operating in countries that have declared this digital currency legal. Therefore, account-holders of this currency can get Bitcoin from its ATMs and through P2P exchanges. Fiat currency, government-issued currencies like Dollar, Euro, Pounds, Yen, and other such currencies are called fiat currencies that are being used to buy Bitcoin or any other crypto-currency through online payment.
In the United States, some famous cryptocurrency exchanges are Coinbase, Kraken, Gemini, and Binance. Furthermore, crypto-currency buyers must use secure internet to maintain security and privacy of their information. It involves two-factor authentication along with the use of a unique password, comprising capital, lower-case letters with special characters and numbers, etc.
Importantly, by opening an account with any reliable exchange, account-holders can purchase/sell any cryptocurrency, including Bitcoin. Further, the people have choice to utilize wallets – Hot Wallets and Cold Wallets. Hot Wallets are available online all the time while Cold Wallets are based on paper or hardware systems. Hot Wallets can be operated from cellphone, laptop, computer, and tablets, whereas, cold wallet consists of paper and hardware which can be kept offline for security. For example, the information maintained in the Cold Wallets can be stored in a USB that can be kept off-line. In the Cold Wallet, a paper wallet is considered the most secure option for maintaining Bitcoin currency and its related information.
History of Bitcoin
Satoshi Nakamato is known as founder of the Bitcoin crypto-currency since Oct 31, 2008. However, it is still a mystery who is the real Satoshi Nakamato as different individuals have claimed to be Nakamato. In 2009, this crypto-currency was made available online for commercial purposes. Nakamoto shared cryptography mailing list “Bitcoin P2P e-cash paper” that was linked to white paper, “Bitcoin: A Peer-to-Peer Electronic System” and both these links are still available online which provide information about basic concepts of this currency. Interestingly, the first online economic transaction occurred on May 22, 2010, when an individual from Florida purchased two Papa John’s pizzas by paying 10,000 Bitcoins. Today, the value of 10,000 Bitcoins runs into millions of dollars because the value of each coin is equal to more or less US$50,000. Thus, Bitcoin buyers and traders will ever remember historical connection between Bitcoin and Papa John’s Pizzas. (Writer is former Resident Editor of daily The Nation, Karachi)

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