Bitcoin has increasingly been becoming more successful and wanted by many. CNNMoney says, unlike stocks, which are a company and the products they produce, and commodities, which are the actual item, bitcoin does not have a physical asset behind it. Bitcoin was created in 2009 and after it’s purchase, it can be traded for various tasks and items such as booking a hotel or buying furniture. Furthermore, there is no central bank to backup bitcoin. Thus, not making it a currency, but instead a cryptocurrency.
The making of bitcoin and its success
Bitcoins are made by complicated algorithms and recorded in a digital log or book. Bitcoins are found on computer servers. The price of bitcoins has recently been skyrocketing. Back in May, one bitcoin was worth about $2,000, but by September, it was worth about $5,000. After dropping down by a thousand dollars or so, in the month of December, everything changed. Now one bitcoin is almost worth $17,000. According to MarketWatch, the soaring in its value has made bitcoin the world’s largest cryptocurrency. It’s current market capitalization of almost $300 billion, according to CoinMarketCap, has given it an unimaginable amount of success.
How bitcoin is acquired and bought and its significance
Bitcoin can be bought online through various companies across the world. For example, in the US, Coinbase can be used to buy a bitcoin. Also, bitcoins can be acquired through a process called mining. Mining is the competing to solve complex math puzzles with computers. Its significance is that it allows investors, or buyers, the ability to wait until the value increases. If so, through the trading of different items and tasks can be made to be easier. If its success continues, the profit gained will have a significance to how it gives users the ability to save money. Also, users benefit from the fact that “international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation,” according to CNN Money.
Why bitcoin is worth so much and what are its risks?
The price of bitcoin has tremendously gone up, but why so? According to Boston.com, “most people buying bitcoin are doing so in the belief that others
will want it even more in the future. The gains, though, have many people, even bitcoin believers, anticipating a big crash.”
The risks are that bitcoins can be stolen through hacking. “Bitcoins worth tens of millions of dollars were stolen from Bitfinex when it was hacked in 2016,” also according to CNN Money. This is a major concern as large sums of money can be stolen through hacking into companies that sell bitcoins. Additionally, once owning bitcoins, a “digital wallet,” which exists on a user’s computer or in the cloud, stores them. This “digital wallet” can accidentally be deleted or viruses could destroy them, therefore, making them risky to have, as you could lose them very easily.
What are other thoughts on bitcoin?
The governments in countries such as Japan, China, and Australia are concerned with taxation and their control of bitcoin. Others, like Stephen Bielecki, an attorney with Kleinberg Kaplan, see bitcoin as an opportunity. He says, “I think the volatility presents opportunity.” It “makes those bets via futures feel more extreme, or feel more pronounced, because you might be saying, ‘We’re betting on an 80% gain three weeks from now.” Though he sounds very optimistic, his enthusiasm for bitcoin allows for potential success. Similar to the governments of various countries, large banks like JPMorgan and Goldman Sachs warned the U.S. Commodity Futures Trading Commission in an open letter about how the certification of bitcoin futures “did not allow for proper public transparency and input.” They explained how a more “considered process” would have given exchanges and trading clearinghouses more time to precisely study ways of protecting price swings, both according to the letter and CNN Money.
Please feel free to comment on this topic below. What are your thoughts on bitcoin?