One would have to be living under a rock to have not heard about the latest craze in the internet world. I am talking about Bitcoin, the poster boy for the cryptocurrency world. We’ve all heard stories and are inundated with news of its stratospheric rise in value. If one had purchased $100 worth of Bitcoin 6 years ago, it would be worth just under $4 million dollars today. How can you not be swayed by that? This has caused a lot of people rushing in to buy without any clear understanding, which in turns drives up the price. It reminds me of the tech stock boom and ultimate bust circa 2006. You felt silly not buying tech stocks as they rose on a daily basis. Pair that up with the insane real estate boom and everyone walked around feeling like a millionaire. I didn’t have much money to invest then, but l ended up making a handsome profit from my stock portfolio which included Apple (duh! sold at $30 while my friend still has his till today), Seibel Systems, Qualcomm and a few others. Watching this Bitcoin madness is like deja vu.
What is Bitcoin?
Bitcoin is defined as a cryptocurrency and worldwide payment system. The first decentralized digital currency that is unmonitored, no banks or administrator. It was invented by persons unknown in 2009 under the name of Satoshi Nakamoto. it was released as open source software using computers that solve mathematical problems. Sheldon of The Big bang Theory explains it best below:
https://youtu.be/_iIWgxnPRwk?t=2m30s
What began as a peer to peer electronic payment system has now evolved into a market with imitators and even online trading under the stock market symbols of BTC and XBT. The Bitcoins are created through “mining” . The stock price was roughly $1,100 in January 2017 and closed for the year at $13,867.18.
Risks of Bitcoin Cryptocurrency:
- Volatility means more businesses might stop accepting them. With such wild swings in prices, even from minute to minute, it might mean you end up paying $2,500 for a sweater. It also means the store giving you back change gives way too much money for a refund (assuming you can get one).
- Bitcoin wallets and data can be stolen. Your Bitcoin is controlled by 2 sets of numbers, one can be made public but needs to be paired with your private key to function. Hackers can steal your information from your hard drive. Four years ago, Mt. Gox, a company handling about 70% of Bitcoin currency was cyber attacked with 850,000 Bitcoin stolen, a value of about 6.6 billion dollars today, leading to their bankruptcy.
- If you lose your personal key, you are shit out of luck. It only works with numbers. There is no physical currency.
- No governing body means no recourse. If you’re scammed, you can’t go running to the banks like we do now :-).
Bitcoin and the energy suck: Biggest Risk
Bitcoin mining requires a lot of energy consumption. The insane growth of digital currency has led to an insatiable thirst and consumption of computing power. Each Bitcoin transaction today consumes the same amount of energy needed for nine U.S homes! Nine! As miners develop faster computers, the energy use will only increase exponentially. As it is now, the power consumed on a daily basis is about the same amount for entire countries. One needs to make a moral decision then and figure out which side of the fence they want to be on.
Should you invest in Bitcoin or other cryptocurrency?
Greed can be a powerful motivator. That is a personal decision. Just remember that what goes up must come down eventually. If you’re psychic and can predict the market, then go for it. If you care about the planet, then you need to make that call to protect the environment. Many people are still picking up the pieces from the last tech bust and l see the same for the digital currency world. As it is, a lot of governments are cracking down or at least monitoring the cryptocurrency world which is popular with criminals and money launderers since it is undetectablen no digital foot prints. Personally, l like currency that l can see, feel and hold. Gold will forever be a favorite and makes more sense to me. There is also a reason for the saying “Cash is King”.
Do you own Bitcoin or any other digital currency? Does it interest you?
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2 and 3 above are critical issues. (Proof that someone who knows his s… writes for Big Bang.)
I hadn’t thought of your other issue- that the volatility would render the currency only of interest to hackers and criminals. (It’s why many firms demand customers/clients pay in Dollars- because they don’t want to deal with the volatility of the bolivar (Venezuela) or the zloty (Poland)
Great point you bring up about demanding people pay in dollars so they don’t have to deal with the extreme valuations. I see it happening more and more in Nigeria as well where airlines demand payment in dollars. It’s going to have to come to a head at some point. I know China is looking to shut it down if they haven’t already and the banks certainly frown on it. Haha about the writers on Big Bang. They are usually on point :-).
Bitcoin is something that sounds good but with all the risks not for me… And agree with you and Roy about Big Bang… 🙂
Yep! Way too risky. It bothers me that you really can’t cash it in even though l know they plan on having more ATM machines available. I know there is one in Malta next to the casino. They had installed it just before we moved away and it was a big deal. My guess is that it probably doesn’t work now..and on purpose. :-).
I hear all about BitCoin and the other crypto currencies from people in various groups.
But I am still skeptical. To me this seems like gambling since SO MUCH is outside of my control. I also find it a bit scary that some unknown people first developed it??
Yes, I love the idea of returns of thousands of %, but I still go by the adage, “If it looks to good to be true…”
I’m with you there with the “if it looks too good” adage. It’s just amazing to me how people choose to be gullible. The flames are definitely being fanned on the groups and l think people feel better when they see everyone in the same boat. I just hope people don’t get hurt too much financially when it all comes crashing down. The last one is still fresh in my mind! Not fun at all, and l have friends still trying to recover.