Bitcoin is one of the fascinating subjects of the digital era. Many people who were mining bitcoins for fun or bought in the early stages are racking hefty amount of money. Bitcoin has blessed some people with fortunes. In the beginning, you would be able to buy 1000s of coins for a dollar. In July 2021, bitcoin is worth over $30k. In this post, I would focus on one question who pays $30k for a bitcoin and why?
Why would one pay over $30k for a single bitcoin?
Every person in the world buy things for 3 reasons:
- for necessity — e.g. food, milk, coffee, etc
- in the hopes of making some profit — buy something at a lower price and sell it at a higher price
- for fun — When you go to a casino, you know that “the house always wins”. However, we want to try our luck. This is the same reason why people buy lottery tickets.
Many buy bitcoin in the hopes of selling their bitcoin at a higher price than they bought it. Apart from this, why would someone buy a bitcoin? Bitcoin is a powerful weapon for hackers.
A group of hackers is demanding a couple of millions in bitcoin from a company that they hacked. Hackers would not ask company to deposit money in a bank account because their identity would get revealed. If they ask for millions in cash then someone would have to leave suitcases full of cash somewhere and someone would have to fetch those suitcases. This can be very dangerous. This is why hackers prefer bitcoins.
In order to get bitcoins, hackers would need a wallet. When you open an account using coinbase, you would have to submit some valid government authorized documents. These wallets are not anonymous. Hackers can create anonymous wallets by other means which are outside of the scope of this post.
After sharing wallet-related details, they would receive get money in a couple of minutes. Once they have money, there are mixer programs which would create thousands of transactions between thousands of wallet that a hacker created. By using bitcoin, hackers were able to remain anonymous and get millions without any risk whatsoever. This is why I call bitcoin — the official currency of the dark web.
Bitcoin is not all bad. Bitcoin believers point out that it’s secure, accurate & transparent. In reality, bitcoins are half-transparent because you can see that wallet-X sent money to wallet-Y. But who owns wallet-X & wallet-Y can be really tricky to find. You can see live transactions at https://www.blockchain.com/btc/unconfirmed-transactions.
I strongly believe that many people buy bitcoins with the hopes of making lots of profit. Lots of people buy bitcoins worth $100 or $200 from their paychecks. Small transactions are really powerful. We witnessed this with GameStop GameStop_short_squeeze. Overnight, people pushed the stock price from $20 to over $300. Bitcoin is an unregulated market. You can just imagine, how people would be manipulating prices using social media. We have seen the power of tweets and how prices of coins going up & down.
My only advice to regular hard-working people who shell out their money on bitcoin is to proceed with caution.