Bitcoin: A Ship That’s Sailed or Still a Great Opportunity?

bitcoin-2007769_640At the time of going to press the value of a single Bitcoin is just over $1600, which puts each Bitcoin at roughly the same value as an ounce of gold (in fact, about $50 more). Gold has been a staple the world over for some 7000 years, making it no surprise that it’s so valuable. Bitcoin on the the other hand has been around for just over seven years.

The skyrocketing value has made it one of the most valuable investments in recent years, akin to buying stocks in Apple or Microsoft back in the 1980s. But is it too late to get involved in cryptocurrencies or are they still a good investment?

According to a report by Dr Garrick Hileman from the University of Cambridge, there are some 3m to 6m active Bitcoin users across the planet making it no negligible market. And according to a study by a Hamburg-based business and market research organisation, Bitcoin has ten times more market share than its nearest competitor.

The volume of people using Bitcoin and cryptocurrency wallets means that the possibility of using Bitcoin as a get-rich-quick method are sadly fading fast. However, that doesn’t necessarily mean that it’s not worth investing into the industry. The primary mode of making money with Bitcoin (rather than buying Bitcoin) is through the processes of mining and verifying blockchain records. Something of a misnomer, the process of mining does not involve extraction in the way it would with gold, but rather creation. Using the spare computation power the one has on one’s personal computer, specific programmes, such as GuiMiner, allow users to keep track of Bitcoin transactions, known as blockchains. When a blockchain is recorded what’s known as a hash is created, the process of which rewards the creator with Bitcoins.

Bitcoin was designed to be a decentralised network without intermediaries between parties using Bitcoin. As a result of this framework — a framework that doesn’t rely on banks in the way that traditional currencies or gold, which require regulation — it’s paramount that all transactions are recorded thoroughly. This is, in essence, how one makes money through mining.

By keeping track of Bitcoin blockchains using extra CPU, one earns something analogous to a flat commission on all transactions using the cryptocurrency. Beyond that, there are centers that focus on mining – creating the currency itself – a process that entails having a computer or network of computers create key-codes that run into the millions of digits.

For the average person, this method of mining large quantities of Bitcoins is out of reach because of the extensive amounts of electricity and hardware necessary. So, if you’re hoping you quit your day job and throwing all your proverbial eggs in the Bitcoin basket, you may want to reconsider. On the other hand, if you’re after a way to make a bit of extra money then downloading some software and letting it run in the background is a safe bet. Don’t expect to buy a villa in the south of France anytime soon, but after a few months, taking a trip to the south of France financed with your Bitcoin profits may not be that far-fetched.

Be it gold or Bitcoin, the chances achieving overnight financial independence overnight are slim. But unlike mining for gold, Bitcoin mining can be done from anywhere with a reliable internet connection.

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