The Story of Bitcoin: Few Guidelines By D

To be honest, I’m still wondering whether it may turn out to be a bubble or not! Going through several articles, I can’t give a clear opinion on Bitcoin but I can say that the underlying technology “Blockchain” is here to stay!

Here are the most frequently asked questions…

Why is it gaining popularity?

Because it is against the system and the government!

How to buy it?

– Download the app “Coinbase and create a “Coinbase” account if you live in the states!
– Since the app doesn’t yet work in the Middle East, you can buy it through the following websites: Bitstamp or Localbitcoins.com (the latter one allows you to meet with the counterpart!)
– Or Buy a fund that tracks Bitcoin, such as the ETF: “GBTC”

Does it fit as part of a diversified portfolio?

Investors are seeing it as a new asset class but money managers haven’t started recommending it as part of any portfolio! Just recently, JP Morgan CEO slashed BITCOIN as being a “fraud”! Despite the growth, bitcoin is still used as an asset, not a currency. The big boys are slowly coming around.

Is it safe?

I am not sure. From what I know, Digital currencies use advanced cryptography, which provides top-notch security and transaction confirmations. Every computer in the network keeps a record of all transactions. This ledger is called a blockchain, and it’s how we make sure nobody’s cheating.

What is Blockchain?

Blockchain is to Bitcoin what the internet is to emails! It is bound to impact a lot of industries as it allows a new problem-solving approach to traditional business management model. Blockchain is considered the new technological “Holy Grail” that will become crucial for the development and enhancement of systems like the Internet of Things (IoT) or Artificial Intelligence.It currently manages the database that records Bitcoin transactions but it definitely won’t stop here. Like the internet, you don’t need to know how blockchain works to use it. In other words, Blockchains are like Excel spreadsheets, but more secure with no central authority needed to approve transactions.

Can you buy real things using bitcoins?

There’s a growing list of online sites such as Expedia, shopify stores, Overstock.com, Dell.com and many others. You can pay your rent or buy an apartment using Bitcoin in Dubai provided there is a clear regulatory scheme in place. The University of Nicosia in Cyprus offers a master’s degree in digital currency.

Who are Bitcoin peers?

While Bitcoin is the most valuable cryptocurrency by market cap, other lesser-known digital currencies have also enjoyed sharp gains such as Ethereum and Ripple!
Is there an unlimited number of Bitcoin?
It is not expected to exceed 21Mn bitcoins. Not a lot to go around on a planet with 7 billion people. People that mine can decide of the amount, so that’s the problem because the miners control the system and can change Bitcoin’s protocol! (Today there are roughly 16.5Mn out there)

Why is it like a new form of gold?

No government and no central bank can control it. It also has a limited and finite supply.
What are the risks?
– It is highly volatile and unregulated. Hackers can also steal your digital wallet and it is not insured.
– The crypto market is often compared to the “dot-com boom” of the 1990s.
– Some see it as a Ponzi scheme or a junk bond because it is not backed by any government.
– The platform can easily be used for Money laundering because it is not regulated YET!

What about governments and regulation?

Governments are starting to intervene. Recently, China’s central bank declared Initial coin offering illegal and asked all related fundraising activity to be halted immediately. Bitcoin tumbled as much as 11.4 percent that day! But this is not bad news because the ban on ICO is temporary, and licensing will be introduced.
Some scotching numbers:
– The total market capitalization (market cap) of cryptocurrencies surged almost 800% this year.
– In 2010, 10,000 bitcoins could buy 2 pizzas; now 10,000 bitcoins are worth $40million!
– The value of Bitcoin this year has surged from $973 to more than $4,000!

The question is now: Will Bitcoin ever be a safe investment or always a gamble?

References: What Happens to Bitcoin After All 21 Million are Mined? | Investopedia http://www.investopedia.com/news/what-happens-bitcoin-after-all-21-million-are-mined/#ixzz4sYyBCVXB

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