Cryptocurrency is now becoming a huge industry. Many of my friends are buying it for investment. It is interesting to note how bitcoin prices have increased in the past months. Today, Mr. Alex M shares to us about understanding cryptocurrency.
When most people hear about Bitcoin they become skeptical. Not only is it new with not much backing it but mainly because it’s intangible. It doesn’t help that many places aren’t accepting cryptocurrencys yet. Not only do people not own any cryptocurrency, they don’t even know what bitcoin is? When they do find out, they don’t care to buy it until they hear the price has gone up 3 folds. Then they make a new account on a cryptocurrency exchange but don’t purchase again until they hear the price has gone up another 3 fold. That’s when the feeling of regret kicks in.
Hindsight is 20/20 but an interesting fact is if you bought only a $100 worth of Bitcoin in 2010, you would have a staggering $75,000,000 in May 2017. With today’s price of Bitcoins appreciation, you would have about $270 million with that same $100. In a matter of about 6 months, you would have gained an extra $200 million. The truth is almost no one would have the patience to wait that long to cash out a fortune. Cryptocurrencies are currently a $256 billion dollar market cap and Bitcoin itself is at $138 billion.
What are Cryptocurrencies?
Cryptocurrencies are digital currencies within its own ecosystem. It is not backed by anything except the trust between the users. As time goes on, more enthusiasts are getting into the mix. This is ideal for the networks security. The more people that own it, the more decentralized it becomes and the more secure it is.
Bitcoin was introduced to the public in 2009 when Satoshi Nakamoto got fed up with bankers getting away with so much. Bitcoin was made in direct relation from the 2008 financial crisis. His vision was to give people the power of their own money and have them control it. No more central governing body telling you how to spend your money. Bitcoin is a peer to peer currency almost like PayPal where the money is transferred from one person to next persons account. Spending money at a store needs to be confirmed by the payment processor then settled into the account. From there, it will take 2-4 business days to settle into the vendor’s bank account. With cryptocurrencies, you are your own bank.
Many people call Bitcoin anonymous but in reality, it is pseudonymous. This means that if someone has your hash address, they can see the activity on your account however they will not know whose account that is specifically. Many people often claim that cryptocurrencies are tax free and even though they might technically seem like they are, it is still your duty to pay your taxes on it, depending on the laws in your country.
Bitcoin is made up of 21 million total coins in circulation. Coins are locked in the network and the way to bring more into circulation is to mine them. Miners have two duties. First and foremost, they verify transactions and add them to the blockchain, which is a public ledger. They also complete complex math problems to unlock more coins. The blockchain is a public ledger where all transactions occur and anyone can see.
Over the past 2 years, many people including bankers and financial professionals have been calling Bitcoin a bubble with no real reason except for the fact that the price has gone up too quick. Considering people haven’t even liquidated any gold or stocks to invest in Bitcoin, I think we have a long ways to go and Bitcoin will prove that it’s not a bubble.
Alex has been very deep in the cryptocurrency space for the last 3 years soaking in everything there is to know. With such a new industry popping up, Alex is constantly sharing about the latest news and updates in cryptocurrencies on CoinPupil. To learn more about him and his work, read here.