What is Bitcoin?
Bitcoin is a form of digital currency, created and held electronically. In a way bitcoin is comparable to Gold bullion. Like gold bullion Bitcoin is worth real-world cash, also like gold bullion there is a finite number of Bitcoin. There cannot be more that 21 million Bitcoins, this means that they cannot be created and devalue the bitcoin. Unlike Gold however you can purchase things with bitcoin, because they are digital currency they can, theoretically, be split down an infinite number of times. However, the smallest value of Bitcoin is known as a “Satoshi”, named after Bitcoin creator Satoshi Nakamoto, and is worth 100 millionth of a bitcoin.
What is Bitcoin worth and what can you buy with it?
On October the 5th 2009 Bitcoins were valued at $1 = 1,309.03 Bitcoin. Since then Bitcoin has increased in value hugely. Part of the reason for me writing this article is because it is speculated that by the end of 2017 1 Bitcoin could be worth $10,000 at the moment I am writing this article 1 Bitcoin is worth $9698.95. In 2009 Kristoffer Koch a Norwegian man writing a thesis on encryption bough 5000 bitcoin for $27 today those 5000 Bitcoins are worth a total of $48,494,775 which is quite a surprise considering he had forgotten he bought them in 2009. Bitcoin is becoming more accepted as a use of currency with over 100,000 merchants worldwide now accepting Bitcoin transaction. You can buy anything from High tech gadgets to ice cold beers.
The Dangers of Bitcoin.
Bitcoin may sound like a guaranteed investment based on their huge growth since launch in 2009. However, they may not be a safe as you think. Bitcoin is extremely volatile and the Bitcoin rate, although usually having a general trend of rising, shoots up and down sometimes hundreds of dollars in a week. Bitcoin is also unregulated and often used as a currency to buy illegal items from the black market. For example, in 2013 the Government became very much aware that Bitcoins were being used to buy illegal items, from fake ID’s to Heavy armaments and guns. The Government shut down the black-market trading site known as the Silk Road and many Bitcoin investors became very worried that the whole market was going to collapse. Bitcoin is still used for illegal dealings; however, it is becoming more common place in regular non-illegal transactions. The problem is that at any point if the Government decided to they could shut down Bitcoin transactions and they would become worthless.
Should you invest?
If this is your first-time hearing about Bitcoin then you should almost certainly not invest, at least not until you know a lot more about how it works. Fortunately, because bitcoins can be split into such small denominations you can still purchase some Bitcoins for any amount of money. If you are willing to play the long game and only spend a small amount of money to make a large return, then it might be worth it. However, if you are planning to spend thousands on Bitcoin then the reward may not be worth the risk.
What is your opinion on Bitcoin? Did you like our article, and did we get anything wrong? Leave a review in the comment sections below.