No matter what their income level is, everyone wants to do all that they can to create a stable financial future for themselves. In recent years it has become more and more common for the average person to consider turning to the world of investing, something once considered to be the sole domain of the very rich, but is now a mainstream activity.
There are, of course, many ways that you can invest even modest sums of money, and new ways seem to be emerging all the time. One such opportunity is something that has recently begun coming out of the shadows where it has been lurking for years and into the mainstream: cryptocurrency.
The chances are that you have recently heard or read that certain cryptocurrencies are hot investment commodities right now. You may have seen that the best known of them, BitCoin, has been rising to record value records recently. You may also have heard the tales of those who got into BitCoin in around 2010, when it was first making the transition from the payment method of choice for drug dealers on the virtual Silk Road to mainstream investment opportunity are now very wealthy based on a modest initial investment. Or rather, wealthy in terms of cryptocurrency. But what does that really mean and is such an investment really a viable choice for supplementing say, a veteran’s TDIU payments or a businesswoman’s standard 401K?
You are far from alone if you are not quite clear on just what cryptocurrency is or how it works. In very basic terms, it’s a form of virtual money that only exists online. There is no such thing as a physical BitCoin. Although it was not the first cryptocurrency by any means, BitCoin was the first to attempt to go mainstream. Invented in the late 2000s by a Japanese hacker/blogger by the name of Satoshi Nakamoto, it was touted as a way for business transactions to be conducted directly, without the need for a third party like a bank.
In 2017, the BitCoin system is reliant upon the efforts of programmers who oversee and record transactions and build a formal blockchain. This is known as BitCoin mining and technically anyone can participate.
Why the idea of a virtual currency like BitCoin is so exciting to some is not hard to understand. The value of the currency is set by a computer algorithm and is not influenced by unstable world events. No credit or debit cards for thieves and hackers to tamper with, and perhaps best of all, no more bank fees.
The idea of the widespread use of BitCoin and similar cryptocurrencies has not quite come to fruition yet, but it is getting there. BitCoin can actually be more widely used now, with major companies like Microsoft and Expedia accepting it as a valid form of payment, as well as a slew of smaller online businesses and even Subway – yes, the sandwich place – have been experimenting with accepting it as payment for orders placed online.
Should You Consider Investing in Cryptocurrencies?
There’s heavily divided opinions on the future of cryptocurrency in the global financial community. There are experts who are very bullish on the idea, pointing to the fact that BitCoin is now an officially government-sanctioned currency in Japan and Dubai, where the easy movement of large amounts of money is a must, the government is working with several blockchain providers to make all transactions in dirham paperless by 2020.
There are negatives of course. It’s hard to place a real value on stocks of virtual currency and if a blockchain provider suddenly disappears – which has happened – the currency may instantly become worthless.
In the end, if you’re willing to risk the money – which you’d have to be if you’re looking at investing – then at the very least a small investment in cryptocurrency would be an interesting experiment at worst, and potentially very lucrative at best.