Bitcoin is the pioneering iteration of digital currencies. Conceived two decades ago, bitcoin was only brought into existence with the proof of concept publication in 2009. Bitcoin and the entire trend of cryptocurrency trading have made an explosive impact on the financial scene. What does this mean for you? Well, the short answer is that is depends on what you choose to do with a newly minted wallet full of cryptocurrencies. Bitcoin in particular has made such an impact that even major news and learning platforms such as Khan Academy and CNN have taken to explaining its function, benefit, and rationale to users. Bitcoin and its cousins in the digital world have expanded beyond a fringe novelty idea into a fully accessible commodity and one that can provide immense value to your investment efforts.
What is Bitcoin?
Bitcoin is a digital token that trades in similar fashion to traditional foreign currencies, often called fiat currencies. The key difference from these more well-understood payment vehicles is its anonymity and decentralization. When you buy groceries at the store with your credit card, you must provide personal identification data in order to complete the transaction. This may come on the form of furnishing a physical ID card to match your identity to the cardholder’s, or in a digital sense, approving the transaction through the use of your signature or pin number. In any case, there is a record that you made a purchase at a particular store for a particular amount. Bitcoin is different in that transactions are made through the use of a sophisticated algorithm that operates as a mask or pseudonym of sorts. It is similar to cash purchases in this way.
When you use cash for the same transaction, the record reflects the fact that a purchase was made in that store for that amount, but the buyer remains anonymous – naturally there is no need to verify you as the buyer. With cash, the value is guaranteed. There is no need to verify that your account has the standing to make a purchase, the value is countable and verifiable instantaneously. Secondarily, bitcoin represents decentralized purchasing power akin to your trading of work hours for goods. You and the buyer set the value of those hours rather than a central authority as is the case with a central bank. This means that the value of bitcoin fluctuates in relation to consumer confidence in its use and continued existence. Here is where the investment value lies.
Why Trade Bitcoin?
Because the value of Bitcoin is prone to sweeping fluctuations, it is a high-risk, high-reward investment. While the value has reduced in recent months, cryptocurrencies have categorically seen meteoric growth and are estimated to enjoy similar leaps in value as the year winds to a close. The upside potential in Bitcoin investment is poised to see enormous gains again this year, but before you sign up for a wallet on one of the exchanges be sure to educate yourself in its trading patterns in order to develop a sound bitcoin investment strategy.
Bitcoin’s decentralized nature means that following trending morale can clue you in on much of the fluctuation that the price witnesses. This means that whether you intend to place a few dollars in an account to buy marginal fractions or are thinking of investing in multiple ‘coins’ worth thousands of dollars, you can just a little more certain of a positive return. Like any investing, cryptocurrencies are accompanied by risks. But with a keen eye for price patterns and a developed strategy to maximize your profits there is no reason why bitcoin should represent anything but a proud and firmly green segment of your portfolio.
You owe it to your savings account to research and consider all your trading options. Bitcoin represents the horizon of online trading, and may just prove itself an immense benefit to your financial future.