In the world of finance, every trader is looking for the next big investment to put their money into to earn a good return. Whether that trader is a day trader monitoring charts every day or someone building up wealth for retirement, profit is the name of the game.
Cryptocurrency such as Bitcoin is revolutionizing the investing world and how people think about value. People in the financial world have traditionally thought about value in terms of physical items such as gold, bonds, stock certificates and commodities. Now that non-physical objects such as Bitcoin and Ethereum have taken on value, how will the financial world react? What used to be a tool for buying drugs and guns on the deep web has now become the hottest financial asset in the market.
Bitcoin was created in 2009 by a mysterious person under the pseudonym of Satoshi Nakamoto (this is not his/her real name; the identity of the person who created Bitcoin is currently unknown). There are a certain number of Bitcoin blocks that can be mined using mathematical algorithms. When the block is mined, a set amount of bitcoins are released to the miner.
As time goes on, the algorithms become harder to complete and the set amount of bitcoins released goes down, creating a limited set amount of bitcoins into existence. Whole new industries of mining operations and financial analysts have been created by this. Unlike fiat currency, which has an unlimited amount because governments can always print more, therefore lowering the value of that fiat currency, there are a set amount of bitcoins in existence. This gives buyers the same value they receive from gold.
In the past year, the price of one bitcoin has been skyrocketing. According to the CoinDesk Bitcoin Price Chart, the price of one bitcoin on January 1st, 2017 was $997. As of this writing, that price is currently sitting at $9,560. If investors had bought bitcoin at the start of the year, they would have earned a 1,000% profit so far – that would turn $100,000 in $1 million.
There is much speculation over the cause of this price increase. One line of reasoning is that as the price increased, Bitcoin gained more media coverage so more people started to take an interest in it. Another possible reason is that merchants are now embracing Bitcoin as a payment option for goods and services. Whatever the reason, big-name investment corporations are starting to ride the wave. Many exchanges are being created to allow Bitcoin amateurs a chance to hold the cryptocurrency.
Many people are starting to see the value of holding cryptocurrency in their portfolio. Investors who preferred to stay on the sidelines are now being dragged onto the field by the irresistible pull of a quick profit. There will always be people that dismiss all cryptocurrency as fraud or a Ponzi scheme, but one thing is undisputed: With the recent rise in price, many people became rich. Some former holders of this asset have taken an amazing profit on their initial investment. For that reason, Bitcoin is not going away anytime soon.