With Bitcoin at nearly $10,000, it is high time that you learn everything about it. The cryptocurrency is about to take over the world. Countries are banning it, leading economists are calling for Bitcoin to be illegal and the surrounding ICO (initial coin offering) culture for other blockchain based businesses have securities law experts in a tizzy.
Bitcoin has the advantage of being first. It was conceived in a white paper in 2008 by a programmer (or perhaps a group of programmers) that tried to solve the problem of transferring value in a digital space. How can you be sure that if you send a file or a payment or a song to someone over the Internet that it is valid? Or that the transfer that you received itself is valid? The answer was a blockchain.
A decentralized and unhackable ledger that keeps a chain of blocks in order so that transactions can be be verified and the chain can’t be corrupted? It sounds like a fantasy, but many computer scientists and experts in the digital and tech world believe that Bitcoin achieved that. Plenty of people that jumped on the Bitcoin bandwagon in the late 2000s and early 2010s are now really on the brink of becoming super rich. How did this happen?
Cryptocurrencies in general are skyrocketing because they are cutting out the middlemen. And the central authority. Today, many companies, including Subway and WordPress, allow customers to pay with Bitcoin. People can even use it as a currency to protect privacy, with privacy products like VPN willing to take Bitcoin. But, unlike the British pound or the US dollar, there is no central bank printing money or artificially controlling the value. The free market is in control. And many people are buying into the trust. Bitcoin is trustworthy, say many, many early adopters.
How does more Bitcoin get created then? Well, there are only going to be 21 million Bitcoin in existence, ever. This effort all begins with Bitcoin mining. So the race is on for Bitcoin miners to help complete transactions on the network and receive newly created Bitcoin in return. The miners use computer power to solve cryptographic puzzles in order to create a block. Then they get paid.
Right now, there are a little over 16 million Bitcoins in circulation and the 21 million mark is expected to be hit by 2140. So you have some time.
Will there be a bubble? Will Bitcoin suddenly come crashing down? It all depends on whether the currency can sustain attacks on the blockchain and whether it continues to be the most widely used cryptocurrency. If Ethereum, an alternate currency, becomes more accepted, it could take the place of Bitcoin. But nobody really knows.
So what should you do about Bitcoin? Well, if you have enough cash, it might make sense to drop 10 grand and see if it continues to rise. But, in the meantime, you will want to learn as much as you possibly can about Bitcoin and cryptocurrencies. They will be a staple of the future global economy, so you need to make sure you understand as much as you can.