April 17, 2013 by Liberty
The bitcoin story is definitely a fascinating tale but quite frankly, I’m getting bored with it. The supporters of bitcoin rave about this cryptocurrency’s security and efficiency. It’s detractors insult it repeatedly and dismiss it as a complete scam. I feel like the majority of the debate avoid the real issues with bitcoins and their viability as a currency. Most arguments made about it just don’t matter with the reality surrounding it.
For those that don’t know, bitcoin is a virtual currency that is completely decentralized. It’s based on computations that can be completed with a computer. The exact science behind it is complicated but it’s reasonably easy for any person to use.
It’s recently expanded in usage significantly. More and more stores are doing business with it. In fact, some organizations deal exclusively in bitcoins. One of the first uses of bitcoin was for the underground (illegal economy.) They can be transferred without alerting any centralized agency. It can be virtually anonymous. It can be used legally too though.
Explosion in Value
Early this year I was looking into purchasing bitcoins at $12 a bitcoin. They seemed like they’d be a fun small investment that wouldn’t be interrupted by government intervention. I eventually decided against it. I let it go and forgot that they existed for a while.
Next thing I know, I’m hearing a story about them exploding in value. The price was up to almost $200 a coin. It had a tenfold increase. If I invested a thousand dollars, I would have ended up making 9k off the deal in profit. Ouch… Just like when I was investing in stocks, it stung to hear it but there is no way to predict that kind of thing.
There were stories from all the libertarian mouthpieces raving about bitcoins. They all were screaming, “this is the greatest thing in the world,” and the like. A lot of people were very excited. It’s hard to blame them, especially if they’re actually invested in the stuff but all good things must come to an end (not really but this did.)
It was only a couple days later when I started hearing the new stories. I heard someone asking, “Is bitcoin dead?” Naturally, I was a little bit surprised. Bitcoins were being raved about only a few days earlier but now they were wondering if they were dead.
The value of bitcoins were collapsing faster than anyone seemed to predict. It was like everyone involved was ditching their coins for cash. To be honest, you couldn’t blame the people selling. Those things that they bought for ten dollars were now up to $200. I’d be selling too.
The value of bitcoins went down 50% in no time. That means that the people that bought the coins near $200 were losing almost half their money in a couple days. That just lead to more and more people abandoning ship. It bubbled up and popped.
Where We Are Now In The Bitcoin Story
The price of bitcoins has stabilized recently around $70. Naturally, by the time this story is posted, this information is probably going to have changed again. Looking down from the top, this can look like a massive failure.
I think the real story behind this is the fact that they’re still $60 above where they started at the beginning of the year. It may have been a bit of a roller coaster going up but it’s still there. People that got involved earlier this year have still made a good profit.
The important question that many people should be asking is whether or not they should trust their money in bitcoins today. Now that the smoke has cleared, is it really a good place to put money?
Bitcoin as a Currency and Investment
One bubble popping doesn’t say much for the success or failure of this cryptocurrency. There are a lot of major problems that need to be considered before putting any money into bitcoins. The story isn’t nearly over.
During the next part of this article we’re going to be discussing the viability of investing or storing your money in bitcoins. You should not be putting your money into bitcoins without having an understanding of the stuff I’m going to be going over in the article. Should you even put money into bitcoins? Find out in the second part of this story.
This is a behemoth of an article that will teach you absolutely everything that you need to know in making your decision.