With the appearance of Bitcoins, there has been a boom in cryptocurrencies. Investors stand to make massive profits by investing in cryptocurrencies. At the same time, there is still a lot of doubt when it comes to investing large sums of money behind cryptocurrencies.
Breaking bitcoin news reflects large profits and large losses from time to time. Here are a few things that you need to know to help you decide if cryptocurrencies are a financial fad or not.
Where does the Bitcoin come from?
In 2009, Satoshi Nakamoto created the 21 million Bitcoins when the Bitcoin network was launched and the Bitcoin protocol was set up. The number of Bitcoins, available on the market, is limited. Bitcoins cannot be counterfeited. Mining the Bitcoins is the only way of getting a portion of the limited number of Bitcoins that are there. Once all of the 21 million Bitcoins have been mines, there is no scope of any new Bitcoin from being added to the marker.
Thus, Bitcoins are mathematical tokens that are controlled by the Bitcoin network protocol.
Where does the Bitcoin value come from?
The value of the Bitcoin comes from simple supply and demand. Since the number of Bitcoins is limited, the demand created is met with a limited supply. Once the miners mine the Bitcoins, the traders trade them in the open currency exchange market.
It is truly the community that gives the Bitcoin its value. This means that the currency if free from any government or authority evaluating them. Pure democratic demand for the bitcoins gives them their value. Scarcity, ease of transfer, fungibility, and ease of verification gives the bitcoins their value.
Where can you use Bitcoins?
Bitcoins are not white elephants. You do not have to sit on your bitcoin waiting for their market value to increase so that you can sell them. As Bitcoins gain popularity, more and more merchants and service providers start accepting them.
There are many websites that accept cryptocurrencies as forms of payments. In places like Denver, you can pay for parking with Bitcoins. But on a larger scale Bitcoins are not the most commonly accepted form of payment. So, the chances are you need to sit on your Bitcoin stash while waiting for the price to be right.
Where are the Bitcoins legal?
Cryptocurrencies attract people by claiming to be free from authoritarian interference. This is true since there is no government or unified authority that is monitoring or controlling the system. If you manage to get swindled in your efforts to invest in Bitcoins there is little you can do.
In fact, there are many governments around the world that have made cryptocurrencies illegal. Since the government cannot control the trading of the cryptocurrencies they choose to make them illegal. Some governments allow their citizens to freely deal with cryptocurrencies. While there are some companies who are yet undecided about their stance towards cryptocurrencies.
Do you know that the cryptocurrency has yet to establish itself as a truly viable alternative payment method, as major companies like Microsoft seem to be still on the fence about it?
There is very little protection from any authority when investing in cryptocurrencies. Their market values tend to fluctuate a lot. They are not the most accepted form of payment. At the same time, cryptocurrencies are gaining attention and momentum. Keep an eye on every breaking bitcoin news before you invest in any cryptocurrency.
