March 23, 2018 | ° F

Buzz About Bitcoin

Buzz About Bitcoin

It seems that whenever I read the news or go online these days, I’m hearing about Bitcoin. I think I understand the basics of Bitcoin: it’s a currency that only exists online, and people can trade Bitcoins for dollars. But what I don’t understand is why there’s such a buzz about it. What’s the big deal? There are lots of currencies in the world, and none of the others seem to be things that I’m supposed to run out and buy. So why are people trying to get me to invest in Bitcoin? And are these people right--is a Bitcoin investment a path to big bucks?

Bitcoin is indeed a digital currency. But that doesn’t mean that it’s exactly like more established currencies--in fact, it kind of means the opposite. Bitcoin is a new and exciting currency that has investors and speculators going wild. Let’s talk a little bit about why.

First, a little background. Bitcoin isn’t the first digital currency the world has ever seen, but it is probably the most important (at least so far). Bitcoin’s advantage comes from its use of “blockchain,” a relatively new innovation that provides a secure online ledger for Bitcoin transactions. Bitcoin (and its many imitators) use cryptography and the blockchain to ensure that everyone knows whose Bitcoins are whose--solving a massive problem with counterfeiting that once plagued the digital currency scene.

One of the unique things about Bitcoin is that it is not backed by any government. That makes it very volatile, but also very appealing to certain segments of the population. This isn’t always a good thing--one of the first market segments to adopt Bitcoin was the black market--but it helps shed light on how Bitcoin might carve out a use for itself as a functional currency.

Bitcoin is technically a currency right now, of course, but it’s hard to find places where it’s being used in that way. Instead, it’s widely seen as an investment. You can track Bitcoin prices on sites like Buy BlockChain, and you’ll find articles on it in the Wall Street Journal and other traditional investment news publications.

Bitcoin has had a wild ride this past year or so:Iit rose from under $1,000 to over $17,900 per Bitcoin in 2017, before crashing down to below $10,000 and then beginning to rise again. Does that mean future gains await? It’s hard to say. Bitcoin is certainly exciting, but it’s important to remember that volatile investments can go down as easily as they can go up, and that you should never invest more than you are prepared to lose. As part of a larger diverse portfolio, though, there’s nothing wrong with buying an amount of Bitcoin you can afford and hoping for the best!

“Time is a currency you can only spend once.” -- Ziad K. Abdelnour

Lissette Harwood is a Former Content Director at District Confidential.

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