Don’t be shy. If you don’t know what Bitcoin is and what happened with it this week, read this. #BitcoinChina #bitcoin

What is Bitcoin? Bitcoin is a cryptocurrency.

Cryptocurrency: a digital currency that uses cryptography to secure transactions and to control the creation of new units. They are one form of alternative currencies. Bitcoin, created in 2009,  was the first cryptocurrency.

In 2009, an unknown person under the alias Satoshi Nakamoto created a currency to eliminate the need for the middle man: banks. There are no transaction fees and all transactions are anonymous.

This made a great impact on domestic and international payments: bitcoins are not tied to any country or subject to regulation. So: no government backing; no outside forces like interest rates or national account balances to affect the price. Bitcoin in its purest form lives in the free market, simply at the mercy of supply and demand, which leaves it extremely vulnerable to significant volatility.

Your digital Bitcoins are kept in a digital wallet, which lives on your PC or in the cloud. Because Bitcoins are unregulated, unlike bank accounts, the FDIC doesn’t insure bitcoin wallets.

If these benefits also make you nervous, it should. Is it any question that this anonymous, unregulated currency is subject to hacking? Accidental deletion of destruction by virus? Or that it significantly enables national and global black market activity? Like any currency, its holders assume risks.

So what happened this week?

Bitcoin value dropped 8% after JPMorgan's Jamie Dimon called it a “fraud” that will eventually fall on Tuesday. The price fell below $4,000 on Wednesday.

Chinese regulators halted all virtual currency trading platforms in the country to mitigate the current risks related to cryptocurrencies. This move resulted from China’s central bank imposing an immediate ban on fundraising using new blockchain-based currencies, also known as initial coin offerings (ICOs) (with “blockchains” simply being the ledger where cryptocurrency transactions are recorded.) It appears that China may soon be a proponent for some legitimate Bitcoin regulation.

What is the future of cryptocurrency?

It seems that a country-less, unregulated currency doesn’t fit in our current financial system. Perhaps it will 50-100 years from now. In the next 10 years, I anticipate we’ll be seeing one or more of the following:

• New instruments for global financial regulation and a global body to facilitate this.
• A growing market for digital currencies, perhaps claimed by a country government or group of countries.
• An increasing number of jobs for cryptographers, cybersecurity, and a technical task force trained to solve cyber crimes.