The world of finance, until recently, has been a hazy mystery to me.
So many variables, so many things to comprehend that always kept
fluctuating like the ups and downs of the stock market.
A major component to understanding the world of finance is being
current on your financial news. If you’ve been doing that properly then
you’ve certainly heard of the sporadic and provocative nature
of Bitcoin.
If you’re not familiar with the digital currency, brace yourself,
there is a lot to comprehend. While Bitcoin is not the first currency of
its kind, it’s the first time an online currency of this type has
gained so much media attention.
What are Bitcoins?
Bitcoin is a digital currency that was created by Satoshi Nakamoto,
although most believe that’s just a pseudonym for the man, woman, or
group of people who created it.
The New Yorker reported Nakamoto was completely unheard of before the
launch of Bitcoin, but made numerous posts throughout 2010 about the
currency in perfect English using an untraceable website and email until
vanishing.
Bitcoin was launched on January 3, 2009, as a decentralized form of
currency treated like a digital natural resource. There are 21 million
bitcoins in total, and approximately half of them are in circulation
right now.
The rate at which they are released is controlled through “mining.”
After an extremely complex algorithm is cracked through a program, 50
more bitcoins are released into the market. This is a very brief summary
of a very intricate process, and I’m certainly glossing over important
aspects of a bigger picture.
If you’re a visual learner, this
infographic breaks
down the Bitcoin purchase process pretty well, or if videos are your
thing, this short video provides an easy-to-digest summary of the
currency.
What Can You Do with Bitcoins?
At the start and initial rise of Bitcoin, as the previous video
references, most purchases were made on the “Dark Web.” Through a
program called Tor, users could remain anonymous and purchase narcotics
(amongst many other things) with it, but not all of the spending was
bad.
Once Bitcoin started getting used more and more, exchange rates to
country’s currencies were included with it and it began to gain some
ground.
Now that it’s gained more users and attention, many are jumping on
the Bitcoin bandwagon: the publishing program for the Quicken Loans Zing
Blog, WordPress, accepts it as payment and certain businesses allow it
as its exchange rate has become more comprehensive.
Bitcoinstore.com, as the title would suggest, allows users to buy a
number of electronic goods and other products exclusively through the
digital dollars. Additionally, one early user of Bitcoin pays his
attorney, landlord and virtually everyone else with it.
Can it be used at a McDonald’s or 7-11? Not right now, but vendors
and merchants are beginning to accept it as a nation-less currency more
and more.
Is Bitcoin a Sound Investment?
The short answer is: it depends on who you ask. The whole reason
Bitcoin has garnered so much media attention over the past couple of
months is due to its rising stock prices. It kept this attention because
the Bitcoin market crashed last week, halving its value in just six
hours.
At the time this article was written, Bitcoin’s shares were hovering above $63 USD, but they’ve been as high as $260 a share.
The recent bubble burst on the share price has left many wondering if
Bitcoin is just a fad, a flash-in-the-pan experiment, but Bitcoin
supporters are encouraging other investors to hold on to their shares
and ride this out via sites like Reddit.
Since the crash happened, the divide between enthusiastic supporters
and critics of Bitcoin have only become more vocal: opposers say the
crash shows that Bitcoin is unstable in nature and is not a viable
currency, while followers say as long as shareholders stay with it and
don’t cash out at the first sign of the market dipping, then there’s a
chance Bitcoin can be treated as a legitimate currency.
Perhaps the most prominent investors in Bitcoin have been the
Winklevoss twins, Olympic rowers and the men who sued Mark Zuckerberg
after he allegedly stole the idea for Facebook from them.
The twins claim to own 1% of all Bitcoins, valued at $11 million (at
the time the source article was written). Their involvement adds a
certain prestige to the volatile image Bitcoin has, but much like the
early days of Facebook, no one knows if this thing is going to succeed.
If you do decide to invest in Bitcoin, best of luck. There is still
half of the Bitcoin market left to be mined but the competition and
risks are still there. The market is in a sort of transitional period,
where it seems that the success and longevity of the “coins” will be
determined in the next couple of weeks or months.
In either case, if you’re considering investing in this grand experiment, do your research thoroughly before you do.
Artical By:- mint.com