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Bitcoin is one of the fastest-growing assets in the world. This digital currency has become notorious, especially amongst would-be investors. In our increasingly digitalised world, it’s easy to understand why Bitcoin has proved such a hit. Last year, the price of one Bitcoin rose above $10,000. However, the value of Bitcoin has taken massive drops, placing it under increased scrutiny. Bitcoin is volatile, but cryptocurrencies are a reality and here to stay.
Should you invest in bitcoin?
It has been ten years since computer programmer, Satoshi Nakamoto outlined the Bitcoin concept in a paper. Now, it’s an effective peer-to-peer electronic cash system, otherwise known as cryptocurrency. It allows investors to make anonymous, untaxable transactions, and it doesn’t rely on a centralised monetary authority. Each bitcoin is stored in a digital ledger wallet and people can transfer bitcoins to your wallet, and you can send bitcoins to other people. When you want to send a bitcoin to another user, you broadcast a message within the private network, and each ‘node’ in the network will receive the message. Then, the system will apply the transaction to each user’s copy of the ledger, updating their wallets. Bitcoin mining is the process by which new bitcoins are created and verified.
Blockchain records every single transaction in a public list, which are secured using cryptography. On the blockchain, internet users can see everyone else’s transactions so nobody can challenge the legitimacy of a transaction. This makes it very difficult to copy bitcoins or spend ones you don’t own. The Blockchain system protects transactions through code and mathematical equations, so if anyone tried to hack blockchain, they would be up against the entire network.
Bitcoin could become a long-term trusted source of value. Those who invest in the currency today may be able to take advantage of future value increases. Setting up an account is simple and there are two main avenues you can go down when looking to buy bitcoins. You can either invest directly in a Bitcoin exchange website or on brokers, such as eToro. It’s very easy to get involved and transactions are fast, with minimal exchange fees. The fee is normally 0.2% of the cost of a transaction. It could be the future of buying goods and services, as an increasing number of companies are accepting Bitcoin payments. Microsoft, Windows and Expedia are among the top companies who have joined the global Bitcoin space.
Despite the success stories, investing in Bitcoin is risky. Many experts are sceptical about Bitcoin’s stability as an investment vehicle. Its prices constantly fluctuate and there isn’t enough information for analysis to determine whether it’s a genuine worthwhile investment. Therefore, many people are using Bitcoin without conceit information about trading parties. Bitcoin is still very new and misunderstood, with prices changing as more consumers and businesses use the system. For example, bitcoin’s value spiked when South Korea’s banks tested out the technology. Also, when China announced a ban on companies from raising funds using initial coin offerings (IOC), the value of Bitcoin dropped.
Since there’s no regulation surrounding Bitcoin, it could prove unsustainable in the future. It’s based on encrypted digital codes, making it difficult to control. It may be harder to make serious plans with Bitcoin whose value is unpredictable. Also, should a rival cryptocurrency overtake Bitcoin, its value could drop drastically, and there are a number of popular competitors, such as Ripple and Ethereum. Bitcoin faces unique threats to its very existence, as well as a range of outcomes that could cause a plummet in value. However, 2018 could still be the best year for Bitcoin, as there are a number of start-ups offering debit cards to help people spend their cryptocurrency. This means the number of users could increase in 2018.
Conclusion
The demand for Bitcoin is growing globally. During times of economic uncertainty, it could be a saviour because it isn’t government-backed. Its value will not decrease if there is ever a disaster in the world economy. Bitcoin has become the most widely accepted form of digital currency in the world. There’s still much mystery surrounding its origin since nobody knows the true identity of the founder Satoshi Nakamoto, but it stands as the most influential cryptocurrency ever created.
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