The word on everyone’s lips for 2017 is Bitcoin. The new type of currency has experienced a meteoric rise this year, with its value almost 20 times as much as it started the year at. While curious investors look to Bitcoin and its brethren in the hopes of making it rich quick, still others are concerned that this is the next dotcom bubble.
What is important to note is that cryptocurrency (the name that describes Bitcoin, Ethereum, and altcoins) is here to stay. So today, we provide a primer on this legendary coin.
What is Bitcoin?
Bitcoin is another type of currency, much like the NZD or the British Pound. However, unlike other currencies, it is not bound by a particular region or governments, nor is it controlled by a bank. The currency is a purely digital currency, tied to no one country or body, and with no physical currency. Instead, it only exists in recorded data online. It’s kind of like when you transfer money from account to another online, if you never see any cash.
What makes Bitcoin better than regular currency?
Bitcoin is better than using regular currency because it is a worldwide currency, not affected by other currencies or markets, and you can send or receive it internationally between any two people who have a Bitcoin wallet without doing any currency exchange. Until recently, the transaction speeds were almost instantaneous, and the transaction fees were low. Due to the massive amounts of trade recently, these have – like the cost of Bitcoin – skyrocketed.
There is a capped amount of 21 million Bitcoin that can ever exist – by the way the currency is designed. Currently, there are almost 17 million Bitcoins in circulation, the rest will be “mined” as time goes on. This means no further money can be produced, and thus the value of Bitcoin cannot be affected by “printing” more. The mining process is when computers solve complex problems that has the effect of verifying each Bitcoin transaction over the internet.
Should I invest in Bitcoin?
At the time of writing this article, 1 Bitcoin is worth almost $20,000USD – up from under $1000USD earlier this year. However, we believe the market is poised to crash soon. And with transaction times reaching to 20 hours, it is going to prove significantly difficult to offload Bitcoin and cash out. It is also likely that Bitcoin exchanges, where you do cash out, will pause operations or shut down, due to lack of regulations. This is what happened the last time that Bitcoin crashed.
Our advice when it comes to cryptocurrencies, is to wait out the inevitable crash and then have a poke around in a year or so and see what’s happening in the space. While the market might drop out soon, it will correct and recover – cryptocurrencies are here to stay. Watch this space!