I know the title is very attractive cause who are you kidding, everyone wants to make money easily. So you would be wondering, how will I tell you something that would double your money in 1 month? It's something quite interesting known as a cryptocurrency that is nowadays just represented by Bitcoin.
Bitcoin? What is that? Money? Can I touch it? No, then why would I want it, it's not even real?
You would be lying if this wasn't your first reaction when you first heard about Bitcoin or about Cryptocurrency and if you haven't heard about it till now you are probably living under a rock for the past 2 months. I would not lie but this was the exact reaction I had when I first heard about Bitcoin in December of 2017( when it almost hit 20,000 USD ). It just felt weird to me that a currency that we cannot touch has value. How does this work?
Bitcoin or Cryptocurrency isn't any different than the currency we have in our respective countries, for example, the United States Dollar (USD). This currency or better known as "Fiat Currency" does not have any intrinsic value since it was removed from the Gold standard in 1971 by President Richard Nixon for the USD. Before 1971 each US dollar in circulation was backed by gold-based securities which basically meant that the amount of currency in your possession represented the amount of gold worth that amount in your possession. But after 1971 there was no underlying asset protecting the value of the US dollar meaning that the value of the currency would be determined by the government making it virtually worthless since it does not have any asset protecting or backing its value. Hence, even though cryptocurrency is not tangible it still has the same value any other fiat currency holds. Some cryptocurrencies in Sweden have even started to back their currency with Real Estate to increase the security of investment given to the customers.
Now since I have established that it is similar to the normal currency which is already in circulation, why is it better? I just have one word to answer that question for you which is that it is Decentralised. What is that? Why does that make cryptocurrency better? In layman's terms Decentralised means that the power possessed by the currency( in this case ) is given to everyone who possesses it. Basically meaning that everyone owning it has the right to make a decision with it and for it. This is unlike a centralized currency like the USD with which only the government can make decisions. It makes the currency practically democratic which makes it the currency of the people, by the people for the people.
In the last sentence of the last paragraph, I hinted at the very important aspect of cryptocurrency and Bitcoin specifically which I will get to at the end of the article. Now, if you know even a little bit about the price of Bitcoin you would know that it has been really volatile recently. You would be wondering why is it's price changing so rapidly? That does not happen to normal currency? Didn't you just say that it's decentralized so then who decides its price? These are all valid questions. The price of bitcoin is basically dependent on the forces of demand and supply. More the people buy it, the more will be its price. It is a faith-based asset, more will be the trust of people in Bitcoin more will be its price. So no one can decide the price of a bitcoin but the people owning it collectively. To show its similarity to currency, the price of currencies also change and the process of trading foreign currencies is known as 'forex' trading, but since these currencies are not decentralized, the price is dependent on authoritative powers. Changes in forex are not usually experienced by the people who actually use the currency but the change is experienced by people using different currencies (e.g. fiat currency) trying to convert their currency into the currency in question.( e.g. Bitcoin)
Now to get back to a point I made earlier. You might have been wondering who actually made Bitcoin? As I told you earlier that it is a Decentralised Currency causing it to be made by an individual outside of any government. In the case of Bitcoin, it is an unknown user under the alias of Santoshi Nakomoto who basically registered for the domain of the website on which Bitcoin was eventually publically announced to the public. It is suspected that Santoshi Nakomoto owns Bitcoin reserves worth in the billions. The only thing associated with the beginning of Bitcoin is this name whose identity is not known to anyone.
Finally, coming back to the title of the Article, Bitcoin and other cryptocurrencies like Ethereum have more than doubled in their valuations over the last two months. I agree, the title was a bit clickbait but over the last two months both these cryptocurrencies have performed incredibly, giving investors tremendous capital gains. The following graphs will help you understand.
Through this article, I hope that my readers have understood cryptocurrency since it's confusing and complex for people initially. In this article, I have just mentioned snippets about Bitcoin as it wasn't the main objective of this article so I would not blame you for not understanding the concept of the singular yet quite complex cryptocurrency which is Bitcoin. I hope to publish articles on that or similar topics in the near future.
Disclaimer: I am in no way providing financial advice or suggesting you invest in the commodities mentioned by me in the article. My sole purpose is to provide knowledge and I would expect you to do your due diligence by researching properly and then deciding whether you want to invest your hard-earned money into something.
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