Bitcoin has captured the imagination of would-be investors everywhere. Whether or not this cryptocurrency will turn out to be a good investment remains to be seen. Towards the end of 2017, Bitcoin prices enjoyed a run-up that makes the dotcom bubble look staid in comparison. This excitement and the promise of overnight riches has a lot of people wondering how investing in Bitcoin actually works. You can check out the Bitcoin Era Software for more info. If that’s you, make sure to take a look at our step-by-step guide on how to trade Bitcoin.
What is Bitcoin?
Bitcoin had an exceptional year in 2017, with value increasing more than twenty times from below $1,000 to peak at just under a whopping $20,000! Such incredible returns have left potential investors wondering how they can enjoy a slice of the action, whilst others suggest it is a dangerous new asset bubble that is primed for collapse.
Bitcoin is a digital currency that was first created back in 2009 by a mysterious figure using the alias Satoshi Nakamoto. This cryptocurrency can be used to purchase or sell items from both people and companies that accept Bitcoin payments with the help of platforms like bitcoin-investor.info. This digital currency differs from traditional currency in a number of ways. Most obviously, Bitcoin is not a physical currency, as it only exists online. Traditional, ‘real-world’ currencies like the US dollar are managed by a central bank, which helps ensure the money supply is managed to keep prices steady.
Bitcoin has no central bank and is not regulated by any state. This means that the supply of Bitcoin is decentralized. The supply can only increase through a process known as ‘mining’. Whenever a Bitcoin transaction is completed, the Bitcoin ‘miner’ must complete a difficult mathematical problem on their computer. Once completed, the miner will receive part of a Bitcoin as a reward.
Why is the Value of Bitcoin Soaring?
Like any currency or assets, the price of Bitcoin is determined by how much people are willing to pay for it you can use this Bitcoin to Western Union exchange tool. How much Bitcoin is truly worth is largely down to opinion. With JP Morgan boss Jamie Dimon recently comparing Bitcoin’s astronomic rise in value to the Dutch ‘tulip mania’ financial bubble of the 17th century, where the selling price of a tulip bulb was ten times the value of the annual income of a skilled job – before losing almost all of its value.
The number of people investing in Bitcoin has also increased to almost 20 million people at the end of 2017, although exact figures are difficult to pin down. This surge in popularity has some traders concerned that the Cryptocurrency bubble could be about to burst.
Bitcoin and other cryptocurrencies have shown huge swings in value. According to data from ETX Capital “Cryptocurrencies’ industry current worth has reached $120 billion”. Bitcoin climbed to over 1000%, but it also showed drops of 40% and 30% at other points. This shows that this investment option is definitely not for the faint of heart. It almost impossible to predict Bitcoin value, so you need to be prepared to take a big hit in the event that Bitcoin depreciates in value.