The Death of Finance or a New Beginning?
Bitcoin and many other cryptocurrencies of the like could be the end of what we know as finance, but it may also be the start of something, well, amazing. Just imagine never having to fiddle around with coins or being embarrassed as you spill them at the cashier. But then again, risks are risks and must be considered….
But what is Bitcoin?
To put it in simple terms, Bitcoin is an online form of currency that is completely virtual: no physical coins, cards, or paper involved.
It is a recent phenomenon and only came into existence in 2009! It works on a “Blockchain” system, which is basically a digital database. Bitcoins can be traded for most currencies in the world but certain governments do not like this (this will become important in the next section) and they have tried, and failed, to take it down.
Users also have a ‘Wallet’, which is like a bank account, and this is on a computer. This allows them to trade, receive and buy Bitcoins.
One man bought a couple of Bitcoins back when they were very cheap (less than a dollar per coin) and kept them on his laptop. He threw the laptop away, only to find out that he has 8 MILLION DOLLARS worth of Bitcoins on it right now; he is desperately trying to find the hard drive in the landfill. How depressing.
The Great (Bitcoin) Depression
Speaking of depressing, your teachers have probably taught you about the Great Depression of the 1930s that sent the world into chaos; well, we could be facing another one because of these cryptocurrencies.
You must understand that the whole system works on a supply and demand basis, and you can easily create fake demand with computerised bots. And more demand= less value. And this is the problem: it’s dangerously volatile.
1 Bitcoin was equal to about $14,000 (I promise this is not a typo) only a few weeks ago. Now, one Bitcoin= $11,000. This is a massive drop for those who invested large sums of money. There was also an 11% market crash a few weeks ago after South Korea readied a bill to ban the trade of Bitcoin. So I wouldn’t recommend investing unless you really know what you are doing…
A few words from a Bitcoin Trader
‘Bitcoin could be the future,’ remarks Mr. Stainsby as I ask him about his opinions on the controversial matter. And I frankly agree with him, it may well be the future. But keep in mind that there are still only less than 6 million Bitcoin users in the world right now. He also pointed out that if it continues to rise’ we will not need banks.’ What would that be like? Imagine the convenience.
However, as a skilled trader, he also notes how volatile the market is and recommends that only those who know how to trade should invest; this is a risky business. Special thanks to Mr.Stainsby for agreeing to give this interview.
So what’s next?
Let me liken the future to a coin (punny). We can either land face up into a new dawn of economic prosperity or fall with our faces on the ground into a pit of economic despair. The markets will continue to change and we will just have to wait and see how this all turns out. Perhaps we may even jump on the ’Bitcoin Bandwagon’…
Oh, and just a link to their website which gives you a little advice: https://bitcoin.org/en/you-need-to-know