Everyone knows about the sudden jump of the bitcoin rate in 2017, which the whole world admired. In an environment where investments look unprofitable, bitcoin promised an easy profit, which caused ineffable joy of investors.
What is bitcoin-mania?
For example, thanks to bitcoin, American rapper 50 Cent became richer on $ 8 million (approximate cost of 700 bitcoins). For this, he should thank his fans who bought his album Animal Ambition (released in 2014) using virtual currency. In those days, bitcoin cost $650, and today it fluctuates between $ 6,000 and $ 12,000. Great advertise for cryptocurrency and a good profit for the singer.
Such stories are very popular in social networks. With their help legends about bitcoin are supported, myths are created, and digital data is placing outside the standard, referring to the fact that cryptocurrencies can be very profitable for those who invest at the right time.
The rate jump of bitcoin has increased its price from 1,000 to 10,000 dollars within just 2017. And a surge up to $ 20,000 caused a stormy reaction from start-up investors ready to invest in cryptocurrency.
At the end of 2017, the major bitcoin exchange platform experienced such an influx that it had to close its doors for newcomers. Within a few weeks, Bitcoin took 1st place in family and professional conversations. Attractive promises of an easy profit forced crowds of digital currency lovers to stock up with Bitcoin.
The Coinbase application, which allows buying bitcoins, was at the head of the downloads on the App Store. Binance, the Chinese virtual currencies exchange platform, has announced that it had received 240,000 registration requests! Within hour!
What is bitcoin?
Bitcoin is a virtual currency, based on computer code and on ultra-secure block technology. It is created with the help of computers that are located around the world. They are equipped with powerful graphics processors, activated by the miners who use the computing сapacity of the network. In exchange for work (mining), they get bitcoins.
The creator of bitcoin is Satoshi Nakamoto, whose identity has never been clearly established. When he created the virtual currency in 2008, he has limited quantity of bitcoins to 21 million. This limited offer of bitcoin (80% is already mined and in circulation) was organized to increase the attractiveness of cryptocurrencies in the future because the extraction of one more bitcoin will increase the price of new bitcoins, and make mining of next bitcoins more complicated. As expected, this would strengthen the value of the currency by the time the last bitcoin is mined. That’s why each subsequent bitcoin is getting harder to get, but at the same time its price and the profit that will be obtained during the mining process potentially increases.
But is bitcoin really a currency? This issue is the subject of disputes between adherents and those who reject the cryptocurrency. Economists say that bitcoin has no value. They argue that it is not a legitimate currency as, for example, euro. Although no one denies the fact that bitcoin`s capitalization is about $ 150 billion.
There are not so many goods that you can buy for bitcoin. Of course, you can buy pizza at Takeaway.com, Xbox video games (Microsoft), trip at Expedia.com or the latest album of singer Björk, but if you decide to shop at a supermarket or go to a restaurant, don’t count on bitcoins.
Is bitcoin the purely speculative asset?
Why do people hurry to buy bitcoin in advance? Because the overwhelming majority of bitcoin buyers believe that they can resell it to someone else for the better price.
Therefore, bitcoin will be mainly used as an active speculative tool. Self-interest is the main motivation for beginners in this business.
But fortunately, the cost of bitcoin is not limited only by this parameter, because large financial transactions in bitcoin have a great importance in terms of investment. All asset managers and hedge funds choose a niche of virtual currencies in order to diversify their wallets.
It should be reminded that bitcoin has appeared in 2008 after the financial crisis. Its goal was to create a new order in the world monetary system. As a result, the main advantage of the cryptocurrency is that it allows you to make transactions between persons without classical intermediaries – banks. Based on this, the currency of the future will continue to move forward, because people are motivated by its usefulness and anonymity.
Even if bitcoin is not a universal method of payment, like the euro, it has never been declared illegal. More and more we hear about the regulation of cryptocurrency, but bitcoin still remains attractive and stays in demand. It is interesting to note that central banks do not consider bitcoin as an outlawed asset, the authorities rather consider it as a rough draft of the future exchange currency.
The backside of the bitcoin
Several studies have shown that this is one of the Mafia’s and drug dealer’s favorite currency. Also, badly calibrated bitcoin requires huge IT capabilities that consume a large amount of electricity, which some call an environmental catastrophe. Also, platforms may be attacked by hackers leaving investors without a penny in their pockets.
What will happen next to bitcoin? Will this cryptocurrency develop further or will it be left out? The financial market is very unpredictable. But with RegularPay you can be sure in reliability and security, as our experienced managers will select the most profitable solution for your project with minimal risks for your capital.