Bitcoin is an online digital currency, just like a dollar or a pound, but with a few exceptions. Bitcoin, introduced by Satoshi Nakamoto in 2009, deals with a peer-to-peer payment system where no middlemen exist and goods can be transferred securely between two people on the planet. It is associated with a heavy network of computers and the currency unit for the Bitcoin system (appropriately called Bitcoin) can be easily obtained by joining the extensive network. Bitcoin offers a fast, cheap and secure transaction alternative, but few are willing to take the leap. So the one million dollar question lingers, is Bitcoin a safe investment?
Bitcoin is only a few years old, an interesting creation that has surprised many and, for the record, has made a name for itself in the top financial charts. Its popularity is huge and it has led some of the best companies like Virgin Galactic to consider it an acceptable source of funding. Bitcoin prices are rising at rates of up to 10% and continue to dominate as the alpha of the market and this has led many to invest in it.
Another special feature of Bitcoin is that it does not have a central bank, nor does it control a central government. It is a global currency and its creation and existence is behind a complex and geeky mathematical algorithm that makes it possible to overshadow government-related mishaps. Cases of political instability and government absurdities that disgrace the economy and drain years of investment in a currency do not occur in the crypto currency system. This creates a safe and friendly investment opportunity with low inflation risks.
With an always amazing upside, crypto currency also has its drawbacks. As mentioned, this thing is still taking baby steps; and with that comes great uncertainties. Bitcoin prices are volatile; is currently increasing strongly and can fluctuate between 30% and 40% within a month. The world is still amazed at the rise and there are very few Bitcoin holders and Bitcoin. This leads to unanswered questions and cold fear among people, as investing in a new unpredictable ‘gold mine’ can have devastating effects. Its novelty breeds a lack of regulation and deters potential investors.
The conundrum surrounding the Bitcoin system is an important factor to consider. Anything can happen and everyone who participates in the Bitcoin market is on high alert. China eliminated the use of Bitcoin in December 2013, leading to a drastic drop in its value from $1240 to $576 in just three weeks. Programmers also determine the functionality of this global currency and many question the thought of risking their finances for a group of geeks. This prevents many from venturing into the system and greatly increases the risk of Bitcoin investments.