Many people have never heard of Bitcoin, and fewer understand what it is and how it works.
But it is rapidly changing the very nature of money – how we earn it, store it and spend it. Bitcoin is a digital currency that was created by a person called Satoshi Nakamoto in January 2009. The true identity of Nakamoto remains a mystery to this very day, as he has disappeared into the shadows, leaving his creation for the world to freely use.
Bitcoin does not physically exist, rather it is a virtual form of currency that existing currencies can be used to purchase or invest into.
Back in 2009, there is a record of a curious investor named Koch, who bought 5,000 Bitcoins for the grand sum of $27
That equates to half of a US Cent per Bitcoin. Today the price of Bitcoin has risen to approx. $4,800 per coin. So Koch’s original investment is now worth $24 Million.
With such an enormous price per Bitcoin now, many people in the coming months and years will be asking ‘can I still make money with Bitcoin?’
Whilst the future can never be predicted entirely accurately, there are some fundamental forces at work that have dictated the meteoric rise of Bitcoin so far, that show no signs of abating in the future.
When Nakamoto invented Bitcoin he wanted to create a peer-to-peer currency that the whole world could use to move money for personal or business reasons, instantly, globally, and with only extremely small cost. As a bi-product of this he also created a method of owning and storing money that was totally private, and beyond the reach of any government and central banking system.
It didn’t take long for a group of smart individuals to realise that in today’s uncertain world, owning Bitcoin could provide a hedge against global uncertainties.”
The problem with the current global monetary system is that it is vulnerable to meddling and mis-management by the Banks, Governments and Central Banks. The 2008 financial crisis demonstrated how vulnerable the existing currency system can be. Also there has been an unstoppable drive to eliminate cash transactions from the world’s economies, thus rendering all personal and business deals vulnerable to being tracked and spied upon.
As the world moves closer to a cashless society millions of people are starting to look for a method to store their money safely and privately, whilst retaining the flexibility and freedom to use it as they wish.
There are also many conflicts and tensions around the world that tend to encourage investors and ordinary people to look for a way of protecting their wealth – wars or rumours of wars in Syria, Iraq, Afghanistan, North Korea and Iran, plus the simmering problems in the Middle East all create a demand that was just waiting for something like Bitcoin to emerge.
Also, there were only a fixed amount of Bitcoins that were programmed into the ‘system’ – 21 million. There can never be any more created – the system is closed forever. Because of this, Bitcoins are a finite commodity, and they are getting scarcer to own, hence why the price has risen by so much.
Some professional investors and financial analysts have predicted that due to the fundamental forces driving the demand for Bitcoin, the price could eventually reach $150,000 per coin, whilst others say there is no reason for the price rise to stop there – predicting half a million dollars per coin within five years.
So, it would appear that the market capitalization of Bitcoin is set to skyrocket, and with it the potential for even brand new investors to make massive gains.
Author: Malcolm Waters.