Bitcoin is the new investor craze everyone is talking about.
Hardly any assets have proved to be as mysterious and alluring as the new digital cryptocurrency has over the last few years, with millions of investors jumping on the bitcoin bandwagon in 2017 and sending its price to record highs. Despite being one of the most volatile and exciting assets on the market, bitcoin has risen from just under $1,000 at the start of 2017 to over $19,000 towards the end of the year. Here is all you need to know about the mystery that is Bitcoin.
WHERE DID IT COME FROM?
Bitcoin is known to be a ‘decentralised’ currency, meaning it is not tied to any central bank or government regulator. It’s a cryptocurrency that has no physical form and it exists only in a set of encrypted code. The creators wanted to introduce a new digital currency that was not regulated and could pass national borders. Bitcoin ‘miners’ crack complex sections of code known as ‘blockchain’ and that can be used as a payment method. The limit introduced by the creators are 21m bitcoins.
In its early days, very few businesses were keen on accepting the new cryptocurrency but as its success has increased, more and more began to take it as an acceptable form of payment. With its growing popularity, its price also rose and in equal measure the criticism and wariness from major financial institutions around the world. People are increasingly beginning to accept the idea of a decentralised currency.
In its relatively short life so far bitcoin has experienced more volatility than many of its currency counterparts have seen in several decades. Bitcoin has gone through several rockets up in price that are closely followed by damaging crashes.
Opinions are very varied on bitcoin’s rallies, some believe it’s just another flash in the pan and others that it may be the start towards being recognised as a global currency and viable alternative to centralised systems. Only time can tell.
INVESTING IN BITCOIN
Even though a single Bitcoin is currently heading towards more than $9,300, online trading platforms such as eToro allow users to engage in fractional trading, whereby sellers and buyers can agree prices based on values of less than one full Bitcoin. Like with any other investment, it is key to pick a strategy and stick to it, especially with an asset so volatile as bitcoin. Using the eToro platform, users can also view the actions of experienced Bitcoin traders and replicate their strategies to achieve the best results.