Copyright: Konstantin Shaklein/123rf
Last year, Bitcoin gained traction and popularity in the digital marketplace world of investing in cryptocurrency. At its record high, the value of one Bitcoin hit $19,783 in mid-December. Despite its recent popularity and waves of Internet headlines though, Bitcoin is not brand new to the world of cryptocurrency. It has actually been around for nearly a decade, and its value has varied greatly over its life span.
So, what does Bitcoin’s fluctuating value as a cryptocurrency mean for investors? It translates to multiple caveats on a need-to-know basis. Here are some things to consider:
Know what you’re getting into: This may seem like an obvious point, but in reality, there are many facets of buying and investing in cryptocurrency, such as the changing value of Bitcoin. In fact, for the first time since November 24th, Bitcoin has dropped below $8,000. In other words, it is important to remember that since Bitcoin’s value is unstable, it’s possible you could quickly lose all the money you put towards your investments in cryptocurrency.
Additionally, it is important to stay current on attempts to regulate the digital trade of Bitcoin. At present, Bitcoin does not have many limitations on where it can be sent from or to, and therefore it can be used in exchange of many goods and services. Some of these activities include the perpetuation of illegal activity since Bitcoin can be (and is) used to pay for darker goods and services.
Know the risks: Bitcoin is a digitally exchanged currency (though you can obtain physical Bitcoins) and as such, it is at high risk, not just as a product of technology but as a form of investment. Bitcoin can be susceptible to hacks and other technological issues, like viruses for example, that can damage your Bitcoin stockpiles if they’re not properly secured or stored. Be sure to also be aware of any scams and fraudulent exchanges of cryptocurrency.
Realize reasons behind the hype: As mentioned previously, one of the reasons behind the Bitcoin hype is that it can be profitable, such as when its value was estimated at nearly $20,000 back in December. It is important, however, to consider that one of its pricing factors comes from its scarcity. In a world of connectivity and easy access to the World Wide Web and a plethora of technology, it may seem like an oxymoron to say that there’s a limited amount of Bitcoin cryptocurrency – but it’s quite true.
There is a maximum of 21 million Bitcoins that will ever be in circulation and only 4.3 million remain to be digitally mined, according to Coin Central in early January 2018. Every Bitcoin has its own private key to be discovered, if it hasn’t already, through digital mining which involves completing blockchains.
In other words, just as with any other non-renewable resource, such as precious metals, oil, etc., the less there is available left for people to claim, the more valuable they become as a result of the difficulty in finding the remaining sources.
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The most pressing problem of the internet age would seem not to be the need to transfer funds without corporate or governmental control. We are under constant threat from hackers, and none of our institutions can seem to effectively protect themselves. On a daily basis, our most corporations are hacked, releasing massive data breaches. Viruses, worms, and the like hold our computers for ransom (will cryptocurrencies enable or deter the info-knappers?).
In the face of this, I find trump’s fixation on a border wall to be absurd. Perhaps it’s the only tangible fix to national security an old man can envision. Instead of wasting billions on a wall, we need a Manhattan-scale project for protecting cybersecurity.
Perhaps block chain technology is that project, albeit decentralized. Which would be great, because our politicians seem not to care.
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