On 14 March, the popular cryptocurrency surged by 6.15% to US$60,790.56, but dipped by 1.8% to US$60,077 one day later. Along with the pick-up of nun-fungible tokens (NFTs) in the visual arts sector came criticism about blockchains, the operating technology of cryptocurrencies like Bitcoin. Critics claim that cryptocurrency mining uses an exorbitant amount of energy. Supporters claim the criticism is overblown.
Singapore’s Payment Services Act consumer protection extends to Bitcoin transactions. Bitcoin is a digital currency or cryptocurrency that resides outside traditional originators of currency such as central banks to offer a means of financial exchange. It is basically a computer file with a complete log of transactional movements. This digital token is stored in a digital wallet and will register as a transaction when one uses the token, either as a payment or receipt.
Bitcoin is built on a record-keeping database design called blockchain. It is different from a typical database in the way that it stores information. Blockchains store data in discrete blocks and are then linked or ‘chained’ together. For instance, in a Bitcoin transaction, when we receive bitcoins from someone, the address of the sender will be recorded as a transaction input while our address will be registered as a transaction output.
Efficient means of exchange is also important for any currency to become the mainstay of trade. Bitcoin, being sort of a version 1.0 of blockchain technology, does not have within its design, an efficient mechanism and speed of transaction. Janet Yellen, the current U.S. secretary of the treasury and past Federal Reserve chair, recently warned that Bitcoin is an “extremely inefficient” way to conduct monetary transactions.
Bitcoin is very volatile. This is evidenced by past data. As this electronic token does not have any underlying tangible collaterals, it is driven by confidence and therefore sentiments. Should an influencer in the likes of Elon Musk or Mark Cuban utters a positive or negative tweet, then it is likely that the cryptocurrency will swing wildly. If you are looking for more stable investments, there are better options.
