One question that has been hitting rounds on the internet is whether bitcoin investment can offer value to investors. Before answering this, it is first important to know what bitcoin is and how it is created. Bitcoin is a cryptocurrency and by this, it simply means that it can be used as a mechanism for making online payments. Unlike traditional banks, this virtual currency is decentralized. In other words, the currency does not have a central control. It also means that the total number of bitcoins that are in circulation is predetermined. In addition, the figure is known to the general public. The whole creation of the currency is controlled and in addition to the control of the creation of new currencies or coins, the system makes use of cryptographic tools, which ensure secure transactions.
Simply, bitcoin is a digital or
virtual payment system whose number of available coins is finite and uses
cryptography, which controls the rate at which new coins are created as well as
the total number of coins in circulation. Before you can invest in bitcoin, the most important step is to know how you will
get or buy bitcoins. There are many bitcoin investors who have put up bitcoin
exchanges that operate online. Joining these
exchanges is very easy and all a person needs to do is to sign up with a
bitcoin online exchange and start buying bitcoins.
The main aim of putting up
bitcoin exchanges is to help in facilitating the buying of coins and generation
of revenues by charging bitcoin users a relatively small fee for transactions.
One thing to note with bitcoin investing
is that it is generally very expensive to purchase bitcoins. This is because in
early October 2014, for example, the
average price of a single bitcoin was about $800. But if you had started
earlier in 2010 and bought bitcoins, you would purchase one bitcoin at an
average of $10 which could be a good return on investment by now. Looking at
the current price of one bitcoin, this suggests that investing in the currency
is somewhat tricky.
The prices of bitcoins have not
been stable since early January 2015, and
there are many factors that have influenced the price of the coin. One main
factor for fluctuation in prices is supply and demand. This factor has played a
huge role because there is a finite number of bitcoins available today
(typically 21 million). Currently, the number bitcoins in circulation is only
13 million. This means that as more people go for bitcoin investment, the demand for bitcoins will drive its prices
even higher. Investing in Bitcoin can be tricky because nobody knows what the
future of bitcoins holds in terms of supply and demand.
