Bitcoin has reached all new heights, attracting
the interest of investors and non-investors alike.
Many people are more interested in trying to snag a piece of this crypto-currency’s astronomical gains than really enjoy the unique attributes of an anonymous digital money.
So should you buy?
No, you probably shouldn’t invest seriously in Bitcoin, but you can buy one or two Bitcoins for fun if you really want.
I first heard about Bitcoin in 2009 or 2010 from my girlfriend at the time. Shee even got me to set up a wallet, so I could use my computer to earn Bitcoin’s in the background. At that time, I was freaked out at the idea of something or someone using my computer’s processing power while I slept, so I’m not entirely sure if I actually own any Bitcoins. Last year, I made some efforts to try to find my lost wallet in the hopes of learning out I had a handful of Bitcoins kicking around from my undergraduate days. But in what has been almost 10 years, I had given my old computer to my sister where it has since passed away. If I ever had any Bitcoins, they’re long gone.
What exactly is Bitcoin?
Bitcoin is a digital currency, which means there are no actual coins or paper money representing it. It was started anonymously in 2009, and exists completely electronically. The interesting thing about this is Bitcoin has no real intrinsic value.
Because Bitcoin doesn’t represent something tangible, its value is determined entirely by what people think it to be worth.
Unlike the currency of a country which is regulated by a government, no one controls Bitcoin. Likewise, there are no Bitcoin banks. Bitcoins are stored in a digital wallet on the user’s computer or in the cloud. There are risks to both of these: the wallet on your computer can be deleted accidentally or lost if your computer crashes, and a wallet in the cloud can be hacked. Because Bitcoins are not regulated by any government, they’re not insured by the FDIC (USA) or the CDIC (Canada). So if your Bitcoins are every stolen or lost, they’re gone for good.
Why is Bitcoin so popular?
The main reason Bitcoin is so popular now is because it’s trading at an all-time high. But the real reasons Bitcoin initially become popular are because of it’s anonymous and unregulated nature. You can use Bitcoin to buy things anonymously, which has made it popular for making illicit or illegal purchases online.
A less dark perk of owning an anonymous unregulated currency is it’s a great way to tuck away wealth outside of the risk of regular currency volatility. This concept probably doesn’t make a lot of sense for North Americans who enjoy fairly stable currency (except for how annoying it is to buy anything in USD as a Canadian right now), but in countries with less political — and therefore monetary — stability, Bitcoin offers an attractive option removed from this risks of government and currency collapse.
Another important reason Bitcoin is taking off is many businesses are warming up to Bitcoin, both online and off, and accepting it as a form of payment for their products and services. The more companies that accept Bitcoin, the more utility it has, and therefore the more valuable it is likely to become.
The downsides of investing in Bitcoin
Bitcoin is volatile af. Few investors can handle watching the price move 20% to 40% in a single day, but that’s the stomach you need to have if you’re going to hold Bitcoin as a long-term thing.
Without insurance or government backing, Bitcoin is one of the riskiest investments available, which means you probably shouldn’t make it the cornerstone of your retirement portfolio. But can you make some quick cash? Probably. Maybe. If you’re really fast and careful, which you’re likely not.
Is there still an opportunity to make money in Bitcoin?
Yes, probably. People are excited about this cryptocurrency and it will likely see gains for awhile. Does this mean you should jump in? Not as an investment, but if you want to put a Bitcoin or two in your pocket for fun, go for it — just make sure you can handle the volatility.
