With the advent of the Internet, communication across borders and time zones happened at lightning speed. Global companies could reach customers without leaving the comfort of their office through video conferencing. Each day it seems that news ways are created to make our lives simpler, removing historical barriers as language and currency. Enter Bitcoin. This digital currency created in 2008, and still today it us unclear just whose brainchild it might be. Also called cryptocurrency, Bitcoin is gaining popularity as a way to pay for purchases in both brick and mortar stores and the Internet. Take a look at quick description of how Bitcoins work:
What goes against the grain of our centuries of reliance on physical currency minted and controlled by governments is the fact that Bitcoins rely on individuals or groups of Bitcoin miners. Hidden within the computer network, Bitcoins are mined by individuals as they solve complex mathematical problems. For each problem Bitcoin miners solve, they receive 25 Bitcoins. Although the market value fluctuates, each coin could be worth $1,000 each. Not bad for what is often ten minutes work. Moreover, unlike physical currency that are produced as necessary, only a limited amount of Bitcoin exists within this virtual market, making it a lucrative business for bitcoin miners. This race to beat other miners to the stash, it almost seems like a game that is kept competitive by making the mathematical problems more and more difficult.
While Bitcoin offers interesting options for commerce without the added costs of credit cards for merchants, the volatility of the Bitcoin market should make investors wary. As of June 23, 2014, the exchange rate for $1 US is $588.90 but once you purchase Bitcoins there is no guarantee that they will hold their value. Just like any investment you run the risk of losing it all. It is an intriguing concept and seems to be a logical next step for our digital world.
Would you be willing to purchase bitcoins knowing that their value can be quickly lost?