Ten Things I Now Know About Bitcoin, And You Should Too
Bitcoin has been called a bubble for its entire nine-year lifespan. The first real murmurs came in April 2013 when the price was $30 per bitcoin. The meteoric rise in prices though, tells a different story.
Here are the ten most important things that I learnt as I spoke to Kay Van Peterson of Saxo Bank and Vishal Gupta of internetdollar.org on BloombergQuint’s special show Bitcoin: Buy or Beware.
This is in no way a comprehensive list or the most comprehensive guide to what a bitcoin really is, but rather an edited addition to the plethora of information existing on this most fascinating asset class – as it’s often been called – of 2017.
1. Buying bitcoin is fraught with risks, the least of which is not knowing how to value it. (And while this is a routine learning, it is the MOST important.)
2. Only 1,800 bitcoins are generated every day.
3. There are a finite number of bitcoins that will eventually exist in the world.
4. The value of bitcoin is discovered by a process called mining. Miners are responsible for recording all transactions that people do on the bitcoin network, and are, in turn, paid with bitcoins.
5. As more and more machines (single machine owned by different miners or multiple machines owned by the same miner) join the mining process, the cost of bitcoin mining goes up due to the electricity and the cost of equipment. This plays a part in the price or value of bitcoin.
Also Read: Bitcoin Is Headed To Wall Street
6. There are about a million machines on the bitcoin network currently.
7. Rules in participation for all miners are well known and coded, and can’t be changed. Miners who don’t like the rules of the game can join other cryptocurrency systems.
8. Most of the world’s bitcoin mining is concentrated in China, but the ecosystem is not dependent on that nation. In fact, it is not dependent on any single geography.
9. Current value of the bitcoin market is about $170 billion, which is a fraction of the size of the global gold market.
10. All cryptocurrencies are not the same. Bitcoin and ethereum are technology driven, developed on the underlying technology of blockchain. There are other cryptocurrencies that are asset driven. And then there are investment-driven cryptocurrencies. Vishal Gupta of internetdollar.org said investment-driven cryptocurrencies, which speak about specific returns, are the most dangerous.
This is a small list but a good starting point for anyone wanting to invest or know about bitcoins and other cryptocurrencies. As my guests stated, people need to study a lot more before they decide to buy or invest in bitcoins. I would agree wholeheartedly.
Also Read: This Is What Could Pop the Bitcoin Bubble
You can watch the full interview with Kay Van Peterson and Vishal Gupta here.
You can catch more of BloombergQuint’s coverage of Bitcoins here.