When it comes to a safe and secure future, everybody looks to make investments into ventures that will become highly profitable and at the very least help in saving up for a rainy day. One seemingly lucrative option that popped up almost a decade ago is Bitcoin.
Rising in value from $570 to a staggering range of $3000-$4000 in just the last year, Bitcoin has heads turning, twisting and minds boggling here and there.
What is Bitcoin? Is your money better off invested into Bitcoin than in a bank?
What is Bitcoin?
Bitcoin is a digital form of currency known as cryptocurrency. This form of currency uses encryption to generate and verify its transactions with all the transactions getting recorded into a public ledger which is maintained on the internet – also known as the Blockchain Network.
Introduced to the world in 2009 by an anonymous group known only as Satoshi Nakamoto as a platform that shall be able to provide users with a peer-to-peer electronic cash system that would prevent double-spending, independent of any central server or governing body, Bitcoin has come a very long way. They are now being used for day-to-day transactions in and around the US just like the US Dollar or any other currency.
Since Bitcoin exists in the virtual realm, it doesn’t conform to the regulatory standards of the physical fiat currencies (like the US Dollar). It actually has no regulations whatsoever. So the existence and value of the Bitcoin is independent of all the financial institutions such as the US Federal Reserve. In its stead, Bitcoins are managed by users via the Blockchain network.
Bitcoins or Banks?
In light of its sudden rise in popularity around the world, celebrities endorsing ICOs and governments taking cryptocurrency-friendly steps in trying to introduce regulations, people assume that Bitcoins are the ideal investment to make. You shouldn’t jump into making investments bigger than you can afford to risk. Why is that?
In its brief time existing in the world, Bitcoin has indeed made waves. Even though the value increase of over 750% from last year makes it look fool-proof, it also suffered a major crash in 2013. Bitcoin went on a run from $1,100 to $700 in a few months time and again in 2015 when it came down to the low of $200!
Bitcoin is extremely unpredictable. The current value of Bitcoin in the realm of $4000 can easily go down to $2000 in a matter of months and any investor who’s playing all his best cards with those $4000 will surely regret it if the Bitcoin value tanks.
The only people who should be investing right now into the Bitcoin market should be the speculators who do not care about the underlying value of anything but only the value of it right now. Those kinds of people can afford to bear the kind of loss which is just as likely to happen as the profit (if not more). As a safer way to store money, you should just stick to the banking system right now and only consider investing.