Bitcoin and How It Becomes Real Money

Background

Cryptocurrency is a secure digital medium of exchange which use principle of cryptography. Bitcoin is the most well-known cryptocurrency. Bitcoin trading was began on 2009 and the number of Bitcoin user have increased significantly since then. Like gold, Bitcoin is obtained buy so called mining process which is a process to solve complex algorithm and miner will obtain Bitcoin if they can solve it. Bitcoin is a decentralize money and open source. It means that it is not controlled by an entity (e.g central bank) and many people can monitor it, so it immunes to predation of banker and politician. The unique subject of Bitcoin phenomenon is how it gains a value and how it becomes real currency. Bitcoin do not have intrinsic value, same as paper money. Long time ago paper money value is tied to the value of gold. However now their value come from a government backing because important commodity are priced in them e.g oil only can be bought using USD. How about Bitcoin?

Analysis

For analysis we use Google Trends to get statistical data of google search regarding Bitcoin and cryptocurrency and we use Bitcoin exchange value to USD. We use Google search data to measure public interest in Bitcoin form 2011 until now. We also want see what the most googled subject about Bitcoin is. Picture 1 on the attachment show the relative number of Google search about Bitcoin and cryptocurrency. We see here that the number of search of Bitcoin overwhelm the number of search of cryptocurrency indicating that Bitcoin itself is more popular than cryptocurrency.

People start googling about Bitcoin from April 2011. Maybe it is caused by  TIME in April 2011 entitle “OnlineCash Bitcoin Could Challenge Governments, Banks”. We see the most typed keywords for Bitcoin in 2011 are “bitcoin-mining”, “bitcoin-miner”, “bitcoins”, “bitcoin-exchange” indicating that people want to get Bitcoin. In 2014 we see keyword “what is bitcoin” have significant value. This indicating that in 2014 non-technical people starting to have an interest in Bitcoins. In the lower part of picture 1 we see that the price of Bitcoin started to rise on March 2013. Assuming that public interest which shown by Google search number is proportional to the number of articles publish related to Bitcoin. We can see that the price of Bitcoin relative to USD dollar is proportional to the number of Google query and also media coverage about Bitcoin. What we can conclude here is how public interest makes combination bit 0 and 1 into real money. Bitcoin cannot have power without public acceptance.