The value of a bitcoin has gone up $5,000 this week, bringing bitcoin value to over $17,000 each, which has caught the eyes and ears of the nation. While many have heard about a bitcoin, many folks aren’t comfortable enough with what they know about this electronic form of currency to invest in it.
Others, who have seen the value spike, are jumping on the bandwagon and buying bitcoin because its value has gone through the roof, giving “Sen. Al Franken, D-Minn., Russia, the FBI and even President Donald Trump a run for their money,” suggests the Chicago Tribune.
On Wednesday, bitcoin was a little over the $12,000 mark, which was the highest it has gone so far since its young inception, reports Yahoo Finance News. From there it went crazy and it broke that record, reaching for an even higher one. As of Thursday’s trading, it had pushed over the $17,000 mark, reports the Chicago Tribune.
What Is A Bitcoin?
First of all, it has “no physical presence” anywhere on the globe, it is strictly an electronic form of currency. So this would mean that you will never hold one in your hand or need a change purse to store them in. They exist only on the internet, according to the Chicago Tribune.
JR Lanis, an attorney with Drinker Biddle, describes bitcoin.
“It is fundamentally a piece of computer code and software that verifies transactions. It can be any kind of transaction. It serves a purpose and derives its value by verifying transactions. That is the technology.”
“Essentially, it is code that says, ‘this is what it is,'” he added.
Why The Frenzy With Bitcoin Value Going Through The Roof?
Fox & Friends Weekend put it quite simply on their Sunday morning show. They suggest that people are hearing how the price is going up and up, so they jump in as an investor. Lanis appears to suggest the same thing when saying, “People think that the price is going to continue to go up indefinitely.”
The Chicago Tribune suggests the price was driven so high by “limited supply. And, apparently, unlimited demand — At least for the moment.”
As far as the price going up indefinitely, if that did happen, it would “be a first,” suggests the Tribune. The bitcoin concept is different than a stock or bond; “the floor value of a bitcoin is zero.” The coin isn’t attached to an asset value except for what it is given by the market. There’s no interest paid on bitcoin, and it is not supported by a central bank.
The value of bitcoin comes from its “faithful following” and because a community believes in the bitcoin, it has a value. The Chicago Tribune equates this with the way gold has held its own value for thousands of years.
Alan Greenspan, who is the former Federal Reserve Chairman, weighed in on the bitcoin topic on CNBC this week.
“Bitcoin is really a fascinating example of how human beings create value and is not always rational.”
“It is not a rational currency in that case,” he also said.
How Do Buy And Sell Bitcoins?
There are websites set up for you to buy bitcoins such as Coinbase and Gemini. You open an account online with these sites that are set up to trade this digital currency. Selling bitcoin goes through exchanges such as Bittrex, Shapeshift, Bitfinex, Kraken, and Yunbi.
What Can You Buy With Bitcoins?
Lanis explains that at this point, the people buying bitcoins are seeing it more as an investment than a new form of currency, but some online sites do take the bitcoin as payment for goods and services.
“There are a few places and vendors in the software business who accept it as payment more than anything else. Even some law firms. But it’s not that functional yet.”
With the value of the bitcoin wildly fluctuating, it is hard to use bitcoin as a form of currency right now.
According to Coin Telegraph, Craigslist appears to be preparing to allow bitcoin use. The Craigslist product and service page now includes the option “Cryptocurrency,” which a member of the online bitcoin community discovered on Thursday. It is not clear when this will be launched, as the only hint to this happening in the future is the option “Cryptocurrency” on their page, but it is a sign of things to come.
Japan boasts 4,500 merchants that already accept bitcoin for payment and that number is expected to jump to 22,500 before the new year arrives, according to Coin Telegraph.
Should You Invest In Bitcoins?
That question will probably get you polarized answers depending on who you are asking. If you are asking this question to someone who purchased their bitcoins before the value had a spectacular $5,000 jump this week, they might say “yes.”
One such person is Leya Yusupov. She is a 37-year-old mother who lives in Queens, who has a finance degree from St. John’s University. Yusupov invested in four bitcoins through a BitIRA retirement account last summer. She also brought some coins to create a personal account just for “plain investing.” As of today, she’s up “tens of thousands of dollars” in each account.
Chief executive of Adviser Investments Daniel P. Wiener was asked if people should invest in bitcoins and his answer was point blank — “I wouldn’t.” His Newton, Massachusetts-based firm manages more than $5 billion in assets.
“Bitcoin speculation in 2017 is equivalent to tech stocks in 2000 and real estate in 2007. All ended badly.”
His quandary lies in understanding where the value of a bitcoin comes in.
“I don’t really understand where the value is, and I always look askance at something that goes up 11 times in three weeks. It doesn’t manufacture anything. It doesn’t pay interest. I would not buy it. I would not recommend anyone buying it.”