Businesses such as casinos now accept bitcoins in their establishment and have even set up bitcoin ATMs. (Photo : Getty Images/Ethan Miller)
The virtual currency known as bitcoin garnered a considerable amount of notoriety after it reached unprecedented value over the past couple of years. Although the hubbub surrounding this form of currency has died down over the past couple of years, it has now reached its all-time high in the past three years.
Bitcoin ended 2016 as the best-performing currency of the year, beating out high performing ones such as the US dollar, the sterling pound, and even the euro, according to the BBC. What's even more surprising is the percentage by which this virtual form of money grew in the span of a single calendar year.
To put things into perspective, China's economy grew by a staggering amount in the past few years, but their currency - the renminbi - fell by approximately 7 percent in 2016. Compare this with the bitcoin, which saw its value rise by roughly 125 percent in 2016, and it is not even traded in most central banks compared to most forms of currency.
Bitcoin is valuable because people are willing to exchange a lot for it. To explain why bitcoins are actually garnered through a process known as "mining." How that works is computers solve complicated problems with 64-digit solutions, which once solved results into a block of bitcoins being processed.
Bitcoins then grow in value due to the incessant need for the development of more powerful computing technology to crack these increasingly difficult problems. Another reason why the around 15 million bitcoins in existence are extremely valuable because those involved in transactions using this currency cannot be traced. The anonymity provided by this form of currency is highly valued.
However, some experts believe that bitcoin reaching its three-year high of $1,033 last Jan. 2, 2017 does not mean much in the grand scheme of things. They argue that the bitcoins are not relevant enough when you take into account how much other forms of currency are worth and how many people can actually benefit from the use of bitcoins. This is even considering that the total value of all bitcoins in existence is an estimated $16 billion.
"For context, the Central Intelligence Agency put the planet's stock of broad money-notes, coins, and various forms of bank account-at $82tn as of the end of 2014," the Financial Times reported. "On the CIA figures, the value of bitcoins hashed into existence is similar to the broad money total for Uzbekistani soms. With apologies to Tashkent, the value of soms and bitcoins, and the number of people for whom they are relevant pieces of information in the world of modern finance, both round to zero," they added.
Watch a guide on how to mine bitcoins here:
