Had you invested $27 on Bitcoin when it was created by Satoshi Nakamoto in 2009 your investment would now be worth over $37, 000, 000. Widely deemed as the greatest investment vehicle of all time, Bitcoin has seen a meteoric rise during 2017 going from $777 all the way to $17, 000 BitcoInvest.cc.
Creating millionaires out of opportunistic investors and leaving financial institutions open-mouthed, Bitcoin has answered the critics at every milestone this year and some believe this is merely the starting. The launch of Bitcoin futures on December 10th, which for the first time will allow buyers to enter the Bitcoin market through a major regulated ALL OF US exchange, implies that we are just starting.
Exactly what makes Bitcoin so valuable is that there is a finite amount in existence. There will only ever be a maximum of 21 million Bitcoins and unlike normal fedex currencies you can’t just print more of them if you feel like. This particular is because Bitcoin operates on a proof of work protocol: in order to create it, you have to mine it using computer processing energy to solve complex algorithms on the Bitcoin blockchain. When this is achieved, you are rewarded with Bitcoin as payment for the “work” you have done. Unfortunately the reward you get for mining has decreased drastically almost annually since Bitcoin’s inception, which means that for most people the only viable way to get Bitcoin is buying it on an exchange. At the current price levels is that a risk worth taking?
Many believe Bitcoin is simply a bubble. We spoke to cryptocurrency expert and permanent investor Fight it out Randal who thinks the asset is overvalued, “I would compare this to many supply and demand bubbles over history such as Dutch Tulip Mania and the dot apresentando bubble of the past due 90s. Prices are solely speculation based, and when you look at Bitcoin’s functionality as an genuine currency it is almost embarrassing. ” For many who don’t know, the dot possuindo bubble was a period between 1997-2001 where many internet companies were founded and given outrageously optimistic valuations based purely on speculation that later plummeted 80-90% as the bubble started out to collapse in the early 2000s. Some companies such as eBay and Amazon, recovered and today sit far above those valuations but for others it was the end of the line.
Bitcoin was actually created in order to take power away from our financial systems and set people in control of their any money, cutting out the middle man and allowing peer to peer transactions. However, it is now one of the slowest cryptocurrencies on the market, its transaction speed is four times slower than the fifth biggest cryptocurrency and its nearest competition for payment solutions Litecoin. Untraceable privacy coin Monero makes transactions even quicker, boasting an average block time of just two minutes, a fifth of the time Bitcoin will go through successfully in, and that’s without anonymity. The world’s second biggest cryptocurrency, Ethereum, already has a higher transaction volume level than Bitcoin despite being valued at only $676 dollars per Ether compared to Bitcoin’s $16, 726 per Bitcoin.
How could Bitcoin’s value so high? I asked Duke Randal the same question. “It all goes back to the same provide and demand economics, relatively there is not very much Bitcoin available and its recent surge in price has attracted a lot of media attention, this combined with the start of Bitcoin futures which many see as the first sign Bitcoin is being accepted by the mass market, has triggered a lot of individuals appearing in the media for financial gain. Just like any asset, when there is a higher demand to buy than to sell, the price goes upwards. This is bad because new investors are getting into the market without understanding blockchain and the fundamental principles of those currencies meaning they are more likely to get burnt”.