There is a great deal of confusion as to why Bitcoin has been exploding upward in value. You will hear a lot about a bubble, how it is unwarranted, and how Bitcoin has no inherent value. The problem with these statements is due to a clear lack of understanding of those making the statements. No one says that Facebook is a bubble, even though Facebook has a market capitalization of 117.72 Billion dollars. The reason that is, is that the growth in value happened while the Facebook was private. When they IPO happened at 100 billion now one batted an eye.
Bitcoin has much more potential for growth as it will facilitate financial and commerce in the most efficient way yet devised.
However, its intrinsic value is much simpler. Bitcoin’s value comes from simply from its utility. Here are a few ways in which Bitcoin and the other cryptocurrencies will be used:
1) It is better store of wealth. That is, it is truly useful and amazingly frictionless. If I want to sell gold, how do I do that and what will I lose on the spot price will I see? With Bitcoin, it has value and it is easy to transfer. It is the perfect money.
2) Money remittance in style of Western Union with little comparative cost anywhere in the where both parties have a Bitcoin wallet or have that service online, like a bank account.
3) An alternative monetization of internet content via a pay per view of cents model rather than annual subscriptions or an ad based means
4) A low cost notary and escrow services built into the code, and low cost payment services that inevitably take market share from credit cards and online payment processes
Ultimately all crypto-currencies fulfill these uses, however, Bitcoin is the largest and most established. It will continue to be the market leader for the foreseeable future if not ad infinitum.
Bitcoin is programmable money that allows the coding to do much of what professionals do today. That is, notaries and escrow services become obsolete as Bitcoin has a the ability to provide both at a fraction of the cost through its public ledger, known as the block chain. In addition, it is operated on a peer to peer network. In that structure, you do not have a centralized entity that is operating for its own stakeholders well being, but rather many thousands of individual are competing for their own interest. The Bitcoin network allows the computer operators that secure the network to set their own price to process transactions, so the networks automatically defaults to the lowest cost node within the system. It provides services at a incredibly small fraction of the cost as compared to the infrastructure widely in use today.
However, the most important aspect, is that it is global. 21 million units to be divided among the masses to better facilitate financial trans actions. There is no worry about the stability of the government backing the currency. It is the first truly global currency, accepted every where. 2014 is going to see astounding growth and 2015 will be the year of Bitcoin. At that point, it will be ubiquitous and the growth will slow to a trickle. It will have arrived at its mature state, useful for all things financial. Not just useful, but many fold more efficient than the legacy banking and money transfer infrastructure that it is to replace.
Think about this, Bitcoin is not even officially launched, it is still in beta testing, version 0.8.5. The value is based on the promise that Bitcoin has, and venture capital has been flowing into to build out the functionality of the protocol, much like in the early 1990s with the internet. Prodigy, AOL, and other tried to make their own networks, but the public network that is the internet is what won. Bitcoin will win this battle of finance, and the alt coins will tag along or perhaps become mildly successful supplements.
Bitcoin only becomes profitable if its source and storage are highly secured. Several minting hardware and ledger wallets are out in the market to provide tight security to the new investments. People often come across news like Coin Mining Direct scam that may be defaming anecdotes. Thus, one should always seek real reviews through their official sites.
We have put together a fundamental analysis of 8 cryptocurrencies here and a step by step ” how to invest” if you would be inclined to do so below. Since the market is so young, the alternative coins are unable to be traded against USD. This presents a hoop to jump through. What that also means, is that you are an extremely early adopter and when it becomes easy, you theoretically will win. See the steps to invest in both Botcoin and the alt coins below. You can buy a fraction of any cryptocurrency. You do not have to buy a full Bitcoin.
Purchase Bitcoin at Coinbase, the easiest, most secure, and fully licensed Bitcoin procurement site:
Click on the image above to get to Coinbase, the most trusted portal to buy Bitcoin in the United States. You can use your bank account to wire funds and this is the most convenient way to fund a Bitcoin purchase. Now, get $5 worth of Bitcoin for free by buying at least $100 worth of Bitcoin when using link.
If you are wanting to buy a coin other than Bitcoin, simply head over to Cryptsy, where you can trade over 50 separate crypto-currencies. I would stick with the ones details in the coins section of this website or those that are trading at high volume and price. Click on the image below to set up an account.
Cryptsy is the #1 alternative currency exchange, doing $1,935,252 in volume daily. Click on the image above to sign up at Cryptsy. If you think Bitcoin is volatile, some of these alternate coins move 1500% over the course of weeks. If you choose to participate you realize that you are making your own decision and you accept the risks inherent in all investment to be yours alone.
Transfer some of your Bitcoin from your wallet at Coinbase to your wallet at Cryptsy. Click on the trade pair that you are most interested and make a trade. The exchanges are open 24/7. Have fun and good luck!