The Truth About Bitcoin and Cryptocurrency
If you bought just $1000 of bitcoins in July 2010, you would now have over $90 million on your hands. From a mere $0.05 a pop seven years ago, the cryptocurrency has steadily been climbing in value.
What’s driving bitcoin’s surge in value? One reason could be the recent upgrades to the system — transactions are faster, and fees are lower. Another reason might be simply that more people know about it and are comfortable with the idea of a cryptocurrency — including investors.
As more mainstream traders and investors get on board, the currency is seen as increasingly robust. For the uninitiated, bitcoin is a virtual currency created by a mysterious individual who goes by the name Satoshi Nakamoto, though that is most certainly not his actual name.
“Nakamoto” introduced his idea for the cryptocurrency in a research paper in 2008, and it was implemented in 2009 as open source code. His reason for creating bitcoin came down to the flaws he saw in the current system banks debasing currency, a lack of privacy and security, banks’ predatory lending practices, and the difficulties and expenses with transferring money.
Bitcoin is not actually a coin, but a line of unique code. And like the dollar bill today, bitcoin has value because people give it value. Like gold, there is a fixed amount of bitcoin that can exist in the world — 21 million. Bitcoin runs on blockchain — a digital ledger that keep tracks of every single transaction made in the bitcoin network. Making it especially secure because everything is public and everything is tracked. It’s the world’s first open financial network.
As people become increasingly wary of government control over individual assets, bitcoin becomes more and more viable: your own personal bank that no one can touch. Your bitcoin is stored in a wallet. This wallet can be a digital wallet or even a physical one — wherever you think your unique key — a long string of numbers that is yours and yours alone will be safest.
If you’re looking to invest in bitcoin, you can do so in different ways:
You can mine your own – which it’s very difficult. As competition for mining bitcoins has increased, only those with powerful computers and cash to shell out for energy costs can keep up with processing the increasingly difficult calculations.
Buy some from an online exchange or number three you can buy shares in a fund that invest in bitcoin. And if you’re looking to cash out, you can do so by selling your bitcoin directly to another user in exchange for another currency, or in an online exchange. Bitcoin’s real world value may be slower to develop.
As a day-to-day currency, it’s still hard to use. While there are some brick-and-mortar establishments that accept the currency – from hotel chains like Howard Johnson to certain restaurants – it’s still difficult to use out in the real world. Online, certain goods and services can be bought with the currency. As more companies and retailers begin to recognize the currency’s growth, adoption will follow.
For now, the currency’s value lies in what it’s worth – with Bitcoin holders closely watching its value climb, wondering when — if ever — to cash out.