Over the past couple of months I have watched bitcoin’s value rise exponentially. I had no idea what bitcoin was and never even heard of crypto currency a few months ago. But with the recent government and media attention crypto currencies have received, they’ve gotten everyone’s attention.
Crypto currency or maybe more simply digital money is gaining acceptance quickly throughout the world as it makes transactions quicker and cheaper. These transactions are secured by cryptography and each transaction has its own signature or private key. Using its rise in value and popularity everyone wants an item of the action. You will find two main methods to generate income with bitcoin. The very first is quite a straightforward method of buying the coin being an investment and hope that its value increases. The second reason is the process of “mining” bitcoins. Once a transaction has occurred they are then verified within the network by “miners” using complicated algorithms. As an incentive for his or her work they receive transaction fees and/or freshly minted bitcoins!
From an investing standpoint there is a huge risk/reward factor as this currency is relatively new and has no intrinsic value causing volatility and big price changes. An optimistic truth is that there is a large number of money dedicated to this and companies are signing onto utilize this currency so we have no idea when its value will go back to zero!
“Mining” also features a big risk/reward factor fortunejack. In the beginning of bitcoin, you was previously in a position to “mine” by having an ordinary laptop or home computer. However now as more people are carrying it out the difficulty and power had a need to “mine” increases. Bitcoins have a maximum amount that may be minted (21 million). And even as we get closer and closer to 21 million the amount of bitcoin rewarded for each successful “mine” gets smaller and smaller. Now “miners” trying to be profitable have to buy complicated advanced mining rigs and there is still no guarantee they’ll be profitable as well as make their costs back.
There’s a third and safer option, though. In just about any sudden happening that promises riches the most lucrative venture is selling the tool that helps produce these riches. For example, in a gold rush it is the shovel and in “mining” for bitcoin it will be mining rigs or powerful graphic cards. If you can produce these as well as get your practical some cheap you would make a substantial profit flipping them. Unfortunately, merely a select few have the blissful luxury of choosing this option.
With people flocking towards the riches dangling facing them the scam artists are receiving an area day as well. Read articles, browse the forums, watch the bitcoin market, and research your costs and ROI before even considering investing anything. For me, you should do this for a few weeks before putting anything into play. This is an exceptionally volatile market and an even riskier investment.