Should I Invest in Bitcoin?

Over the past few months I have watched bitcoin’s value rise exponentially. I’d no idea what bitcoin was and never even heard of crypto currency a couple of months back. But with the recent government and media attention crypto currencies have received, they’ve gotten everyone’s attention.

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Crypto currency or more simply digital money is gaining acceptance quickly all over the world as it tends to make transactions quicker and cheaper. These transactions are secured by cryptography and each transaction has its own signature or perhaps private key. With its rise in value and popularity everyone wants a piece of the action. You’ll find two major ways to earn a living with bitcoin. The first is a fairly straightforward approach to purchasing the coin as an investment and hope that its value increases. The 2nd is the process of “mining” bitcoins. When a transaction has occurred they’re then verified over the network by “miners” using complicated algorithms. As a reward for their work they receive transaction fees or freshly minted bitcoins!

From an investing standpoint there is a huge risk/reward factor as this currency is fairly new and has no intrinsic value causing big price changes and volatility. A good fact is the fact that there’s a considerable amount of money invested in this and companies are signing on to make use of this currency so we have no idea when its value will return to zero!

“Mining” even offers a huge risk/reward factor. In the beginning of bitcoin, you used to find a way to “mine” with a standard laptop or home computer. However as more individuals are doing it the difficulty and power needed to “mine” increases. Bitcoins have a maximum amount which can be minted (21 million). And as we get closer and closer to 21 million the amount of bitcoin rewarded for each successful “mine” gets smaller and smaller. Now “miners” looking to be profitable have to invest in complicated advanced mining rigs and there is now no guarantee they are going to be profitable or perhaps even make their costs back.

There’s a third and safer option, however. In that promises riches the best lucrative venture is selling the tool that helps produce these riches. For example, in a gold rush it will be the shovel and in “mining” for bitcoin it would be mining rigs or perhaps powerful graphic cards. If you happen to are able to produce these or perhaps get your hands on some cheap you would make a significant profit flipping them. Unfortunately, only a select few have the luxury of choosing this option.

With individuals turning towards the riches dangling in front of them the scam artists are having a field day as well. Read articles, browse the forums, watch the bitcoin market, and research your costs and ROI before even considering investing anything. In my opinion, it is best to do this for one or two days before putting any money into play. This is an extremely volatile market and an even riskier investment.

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