If you’re like most of the country this holiday season you’ve probably been talking about Bitcoin over Thanksgiving or Christmas dinner. However, what is Bitcoin and should you be investing? These are two very different questions, depending on who you ask.
Bitcoin is a very complex algorithmic store of value and is designed to be used as a currency. It is supposed to replace decentralized banks, leaving the power of commerce in the hands of the people. It was invented back in 2009 by Satoshi Nakamoto and was an open source project.
At first it was possible to “mine” bitcoins with a powerful computer (or not so powerful, depending on your perspective). However, as more and more bitcoins became found, the difficulty of mining a new bitcoin became harder and harder. It is now almost not profitable to mine bitcoin vs the amount of energy it takes to actually run the mining computer itself.
Over 100,000 merchants and businesses accept Bitcoin as a way of payment. However, due to the exponential rise in the value of 1 Bitcoin over the last year (2017), it has become less of a currency and more of a store of value.
It’s true that economists are quite divided on how to approach Bitcoin, and what to even say about it. Is it a good investment or is it more like playing the lottery or going to a casino? The only thing that remains true as the currency goes through surges and crashes is that nobody knows for sure.
People have become quite wealthy due to the meteoric rise of this digital currency. And Bitcoin isn’t the only currency you can now purchase and/or mine. There are hundreds of other “cryptocurrencies” that are being traded every second. Litecoin and Ethereum are two of the most popular, and are available for purchase on Coinbase, one of the most popular trading platforms for US users.
The problem with Bitcoin is that since it’s decentralized, there are problems with theft (as in the Mt Gox disaster) as well as the fact that it’s not insured and not traceable if it’s stolen. This has led to the development of hardware wallets such as the Leger Nano S and other similar devices. This ensures that your Bitcoin stash remains safe.
There have been a lot of reports of Bitcoin being stolen thanks to hackers. So a few things to be sure to do are to keep your computer clear of spyware with something like Spyhunter, and ensure your coins are stored in a safe places such as a hardware wallet. The consensus is that leaving your coins on an exchange is asking for trouble (this is due to the tragic downfall of Mt Gox).
So what do you think of this rise to prominence of Bitcoin? Is it a bubble or is it here to stay? Have your say in the comments below!