What is Bitcoin? Is it a good investment?

Bitcoin (BTC) is a new type of digital currency with cryptographic keys that is decentralized to a computer network used by miners around the world and not controlled by a single organization or government. It is the first digital cryptocurrency to gain public attention and is accepted by a growing number of traders. Like other currencies, users can use digital currency to buy goods and services online, as well as at some physical stores that accept it as a form of payment. Currency traders can also trade bitcoins on bitcoin exchanges.

There are some major differences between Bitcoin and traditional currencies (such as the US dollar).

  1. Bitcoin does not have a centralized authority or clearing house (for example, government, central bank, MasterCard or Visa network). The Balancing Payments Network is managed by users: miners around the world. Currency is transferred anonymously directly to users via the Internet without going to a clearing office. This means that transaction fees are much lower.
  2. Bitcoin is created through a process called “Bitcoin mining”. Miners around the world use mining software իչներ computers to solve complex bitcoin algorithms և to approve bitcoin transactions. They are rewarded with transaction fees and new bitcoins resulting from the solution of bitcoin algorithms.
  3. There are a limited number of bitcoins in circulation. According to Blockchain, as of December 20, 2013, there were about 12.1 million in circulation. The difficulty of extracting bitcoins (solving algorithms) becomes more difficult as more bitcoins are created and the maximum turnover is set at 21 million. The limit will not be reached until approximately 2140. This makes bitcoins more valuable as more people use them.
  4. A public log called Blockchain records all bitcoin transactions and shows the corresponding reserves of each bitcoin owner. Anyone can access the public log to check transactions. This makes digital currency more transparent and predictable. More importantly, transparency prevents fraud – the double cost of the same bitcoins.
  5. Digital currency can be obtained through bitcoin mining or bitcoin exchanges.
  6. Digital currency is accepted online by some retailers with a limited number of merchants.
  7. Bitcoin wallets (like PayPal accounts) are used to store bitcoins, private keys, and public addresses, as well as to transfer anonymous bitcoins to users.
  8. Bitcoins are not insured, they are not protected by government agencies. Therefore, they can not be recovered if the secret keys are stolen by hackers or lost due to a failed hard drive or the closure of the bitcoin exchange. If the secret keys are lost, the associated bitcoins can not be recovered and will go out of business. Visit this link for the bitcoin on the FAQ.

I believe that bitcoin will gain more popularity among the public, as users can remain anonymous when buying products and services online, transaction fees are much lower than credit card payment networks. The Public Booklet is available to anyone that can be used to prevent fraud. The supply of currency is limited to 21 million, and the payment network is operated by users and miners instead of the central government.

However, I do not think it is a great investment because it is too volatile. For example, the price of bitcoin has risen from about $ 14 to $ 1,200 this year, before falling to $ 632 per BTC at the time of writing.

Bitcoin grew this year as investors speculated that the currency would be more widely accepted and that it would grow. The currency fell 50% in December as BTC China (China’s largest bitcoin operator) announced that it could no longer accept new deposits due to government regulations. And according to Bloomberg, the Central Bank of China has banned financial institutions and payment companies from conducting bitcoin transactions.

Bitcoin is likely to be more widely accepted over time, but its price is extremely volatile, sensitive to very sensitive news, such as government regulations and restrictions, which can adversely affect the currency.

Therefore, I do not recommend investors to invest in bitcoins unless they are purchased for less than $ 10 per BTC, as this will allow: a much larger level of security.

Otherwise, I think it is much better to invest in stocks that have a strong foundation, such as great business prospects, management teams, because the underlying companies have intrinsic values, more predictable.

Revelation. Victor Liang has no position in Bitcoins և does not plan to change his position in the next 72 hours.

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