I first wrote this article in April 2017. This is indeed history repeating itself. While a few years ago, one bitcoin traded for $ 14,000, today it is trading above $ 30,000. It had even reached $ 40,000 on some exchanges only a few days ago. While four years ago, the frenzy was caused by retail investors with FOMO (fear of missing out), the situation is quite different now.
Bitcoin and other cryptocurrencies have experienced a boom only a few months ago. Today the cryptocurrency landscape looks very different. Does bitcoin have a future or was, what we saw in December 2017, the peak of bubble, that is about to pop? Or are bitoin and other cryptocurrencies the future that are merely taking a little breather before firmly establishing themselves as real contenders to fiat currencies such as the Dollar or Euro?
You may be holding, or hodling, bitcoin, trading them against dollar, euro, pound, or yen, and looking in disbelief how a once hyped cryptocurrency has lost over 50% of its value within a few months. Thus the world of the speculative bitcoin. Then again, it was invented as an alternative currency to existing government-issued currencies. As the only real use for currencies is to exchange them for products and services, why not use your bitcoin to start using them in the manner for which they were originally created: to purchase something.
Bitcoin and other cryptocurrencies were the new big thing at the end of 2017 peaking just around Christmas. Bitcoin had broken the 20,000 dollar mark and all other cryptocurrencies only knew one way and that was up. Things have changed substantially since, but this may be a good sign, as it is likely to clean out some of the garbage coins that were created only to make a quick buck from those seeking quick riches.
I had a conversation recently about the value and substance of cryptocurrencies. "Is bitcoin worth investing in" was one of the questions. "Is bitcoin really worth almost $ 8,000? Is cryptocurrency in general worth investing in? Are cryptocurrencies based on anything substantial" were a few more. You probably recall that Bitcoin stood at almost $ 20,000 just a few days ago. Is something that was created from nothing worth as much as a car? If you take gold, a material that finds many uses in real life, it is only worth a fraction of Bitcoin.
I've just spent a good couple of weeks trying to open a cryptocurrency account to start trading. I've been mining and using faucets until now. That is as long as they were still profitable. But as much as I am careful when it comes to finances, I do enjoy a bit of speculative fun. Thus, I decided to open an account with a couple of exchanges. Initially I only wanted to register with one exchange and take it from there. Unfortunately this attempt failed rather badly.
One of the advantages and greatest assets of Bitcoins lies in how they are sourced. Their quantity is limited in that the more are mined, the more difficult it is to obtain them. It really is not much different from gold, oil, or any other precious resource.
Think gold rush: Those who arrived first found the biggest chunks of gold. Those who joined the rush too late struggled to reap the benefits for their endeavors and saw their dreams of being millionaires go up in the dust they hoped would hold their treasure.
Last night a friend asked me to write an article about Bitcoins. She works as a manager in a fast growing IT startup constantly surrounded by the most cutting edge technology and yet is still perplexed by the way Bitcoins work. Her main questions were: how do digital currencies such as Bitcoins relate to real life and more fundamentally, what are Bitcoins?
It shall be my pleasure to shed some light on what Bitcoins are and dedicate this article to the most popular digital currency.
