The Bitcoin exchange value has risen rapidly in 2017, encouraging cryptocurrency mining and investing. Is Bitcoin the new gold?
Prior to February 2017, the value of the cryptocurrency had never exceeded $1,000 per Bitcoin unit, according to Buy Bitcoin Worldwide. Amazingly after breaking that first $1,000 milestone, the exchange rate has exploded, exceeding the price of gold, according to this from the Inquisitr.
A single Bitcoin is now valued at $4,420, making it the most valuable currency in the world. The concept of cryptocurrency mining, investing, and spending is less than a decade old. Essentially, cryptocurrency is real digital currency, which can be earned, purchased, sold, or traded for goods, all without government control.
Cryptocurrency purchases are not completely untraceable, but cryptocurrency transactions are much more private than bank or credit card transactions. If complete privacy is desired, there are ways to make Bitcoin purchases very hard to trace, according to Stack Exchange. Bitcoin can also be used to make international transactions easy.
Bitcoin was developed in 2009 by Satoshi Nakamoto, and on May 22, 2010, the first purchase was made using cryptocurrency. Two pizzas were purchased for 10,000 Bitcoins, according to Business Insider. Today those bitcoins would be worth $44.2 million dollars.
Cryptocurrency is based on a complex system that pays individual “miners” a percentage of each transaction, to allow the use of their equipment to process cryptocurrency transactions. That process is called mining.
Bitcoin and other forms of cryptocurrency can be either purchased or obtained by mining. Cryptocurrency mining is a computer-driven process that takes time, an investment in equipment, and a lot of electricity. The cost of mining cryptocurrency is often debated. Is it worth it? The income seems to come in very slowly when mining and many complain about the electric bill.
Purchasing Bitcoin seems to be a faster option than mining, and if anyone had been wise enough to buy Bitcoin in January of 2017, they could have more than quadrupled their investment over the past nine months. The question is, will the value continue to increase? If so, for how long?
The price of Bitcoin is based on supply and demand. Since Bitcoin was designed with a fixed supply of 21 million coins, that is a limited supply, unlike most fiat currency. Over half of the 21 million coins have already been created. Limiting the number of coins was intended to prevent devaluation of this popular cryptocurrency.
Cryptocurrency value is measured against the U.S. Dollar, the Chinese Yuan, and the Euro, which are fiat currency. The value of each Bitcoin is an average exchange rate, rather than a set price. Exchange rates vary on different exchanges. Perhaps the greatest value of cryptocurrency, though, is the ability to trade independently of national currency both locally and internationally.
For example, the value of Bitcoin is extremely high in the Zimbabwe exchanges due to their currency crisis. Sudden and extreme inflation has rendered their national currency nearly worthless, but by using cryptocurrency they can still buy and sell with a strong currency. The devalued fiat currency has driven up the value of the popular cryptocurrency in their local exchange markets, according to Bitcoin.com.
Mining and investing in cryptocurrency paid off for the lucky citizens who have digital currency, as well as the various vendors now accepting the digital currency. The average Bitcoin exchange rate in Zimbabwe is $6,150 while individual transactions have gone as high as $7,200
So is Bitcoin or any other cryptocurrency guaranteed to hold its value? No, but neither is any fiat currency guaranteed. Most countries have seen high inflation rates and devaluation of their currency. Some national currencies like Venezuela, Greece, and Zimbabwe have gone through a currency crisis. Having some Bitcoin assets is one way to safeguard against such emergencies.
RELATED REPORTS FROM THE INQUISITR
Bitcoin and other cryptocurrencies can be used as investments, but they are also alternative currencies.
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