I thought I would give you an overview of what is Bitcoin, since I wrote the blog post I have joined an investment, reward and education program called Bitlocity. If you would like more information about this click here
What is Bitcoin?
First off, let’s understand what Bitcoin is. Back in 2007 a person or group only known as Satoshi Nakamoto started writing code for a crypto currency that would develop into the Bitcoin that we know today. In August 2008 the domain name Bitcoin.org was registered and a website of the same name was created. The true identity of Satoshi Nakamoto has never been verified although there have been a number of persons come forward to lay claim to it.
How is Bitcoin produced you ask?
Well Bitcoin is “mined”. To mine Bitcoin a computer is used to undertake mathematical calculations that will confirm transactions. There is no physical coin that is Bitcoin. All Bitcoin that are in existence and will ever be in existence are cryptocurrancy. It is a virtual currency with no central banking system, based in no one country. This makes spending Bitcoin a very private method of investing. Additionally there is a finite number of Bitcoin that will eventually be mined. This is fixed at 21 million with about 85% of these already mined and in circulation. It is estimated that the last ever Bitcoin will be mined in 2140
That’s enough of the origin of Bitcoin. There are numerous good sources out on the internet that will tell you all about the how, the who and the ins and outs of Bitcoin history. These websites will also quite often give you an opinion as to the future of Bitcoin trading, but I prefer facts. Looking at the numbers will give a better understanding of the longer term impact that mining and trading or Bitcoin has on the price that it trades at in the real world. .
When the first Bitcoin came into being the price per coin was fairly low at 1 US Dollar. But as of December 2020 that had risen to a gargantuan sum of over $30,000. That is a massive growth in price over a relatively short period of time. The only other investment that is realistically attainable by the majority of the working population in the USA and UK that has grown substantially in the past decade has been property. Interest on savings is at an all time low. The average saver in the UK now only receives 0.64% a year return on their investment. Even in the early 1980s when the rates were a lot higher savers would only get a 7% to 10% return..
Many Millennials are now being shut out of the housing market due to rising house prices. So they now have to look at other options to help their money grow as interest on savings is at an all time low. According to a study that was undertaken by the website Rightmove the average house price in the UK has increased by an average of 41%. But this is just an average. In some areas of the UK house prices has risen by a colossal 120% down to a still eye watering 28% rise in the past decade. These rises have made Bitcoin and the gains that it has made in the past few months look more and more attractive to people that may want some mid to long term investments.
Bitcoin alternative to property buying?
One good thing going in Bitcoin favour as opposed to buying property is the fact that you can buy them fractionally. Yes, you can save money in a savings account of some type but as mentioned previously, interest rates for savers are extremely low at the movement. So let us say you have only enough cash to buy half a Bitcoin, and then you will pay for that half at the rate that the currency is that day. The value of the coin changes on a daily if not hourly rate. Giving brave or foolhardy investors the possibility of large potential gains. But, as with all forms of investment there could also be massive losses if you trade badly.
Over the longer term it looks like Bitcoin could be a possible winner in the investment field. One of the biggest issues faced is if you lose your Bitcoin wallet, which contains your private key. This is pretty much impossible to reclaim. Unlike if you lose your bank details, you can just go into a branch with the necessary identification and reclaim your asset. There have been several high profile cases of were people or trading companies have failed to back up their systems correctly and they have lost the content of their Wallet. This means it is not lost just to the owner of the coin but also to all others as well. It is estimated that between 3 and 4 million coins are completely lost to their owners. Unfortunately it is virtually impossible to see the coins that are lost as they are in a chain with others.
Conclusion
The original premise of this piece was asking the question: Bitcoin. A new way of trading or unrealistic hype? To be perfectly honest, buying and trading Bitcoin can reap huge rewards. It can give gains that cannot be equalled in any other financial undertaking. The profits are there to be made but as the saying goes caveat emptor, let the buyer beware. Before any decision is made to invest or not invest in Bitcoin, you should make sure that you have as many facts as possible. Don’t just crunch the numbers, make sure that you get right down to the nitty gritty. Look at a wide range of sources, talk to other investors and most of all try not to over extend yourself with the lure of financial gains lit up in your eyes.