What is Bitcoin and why is it so popular
Bitcoin is a digital currency, the first to appear on the market when the industry was in its nascent stage a little over a decade ago. Launched in 2009, Bitcoin’s growth was initially sluggish, remaining at a few dollars for a a couple of years. The price spiked spectacularly to $21000 shortly after, to the amazement of both pundits and investors. At that peak, many investors made a lot of money, which attracted even more interest in the coin. What makes Bitcoin so popular?
The global popularity of Bitcoin is driven by a number of factors which combine to ensure it retains that lead. As is often the case, the first product in a primarily novel and innovative industry captures the imagination more than those that come afterwards. It was also the first coin to adapt block chain as the operational software, heralding the era of complete anonymity in financial transactions. Founded by an individual whose identity remains a mystery to date, the performance of this coin has continued to amaze.
Although the value dropped to around $6000 shortly after the sharp rise, Bitcoin has since rallied, trading at $13000 today. Given the sustained global interest in the coin, it is possible that the demand will continue to drive it upwards. Among the hundreds of cryptocurrencies that exist now, this one is the premier value proposition for pundits and potential investors.
Other digital currencies that followed Bitcoin have not performed as well, with none ranked at even 10% of its value. The interest in Bitcoin is so overwhelming that a coin like Ethereum, which is the next most desired crypto, is currently valued at around $400, a mere fraction of Bitcoin’s value. Does this extraordinary performance come with drawbacks? Yes, that would seem to be the case.
Virtual currencies are usually launched with a known and finite number of coins offered, which means that there will be no more Bitcoins floated to drive down the price. What this means is that there is a very low possibility that the price will drop significantly in the future, effectively locking out many investors who cannot afford the coin at the current value. It is also argued that the bulk of Bitcoin is held by a few individuals who determine the direction it takes. Whatever the case, the small investor who was not an early buyer is locked out of this coin.
Alternatives are there, however, so it shouldn’t mean that one cannot find other coins to invest in. If you intend to, it is advisable to exercise due diligence because the market is flooded with numerous scams in the name of cryptocurrencies. Investors have lost their money in such schemes, the most famous being Onecoin which purported to float an Initial Coin Offer (ICO) that turned out to be a scam. Do not be attracted to low prices offered by a digital currency simply because that is what you can afford. It could be a con game hoping to skim dirty proceeds from unsuspecting and uninformed buyers. Luckily, it is possible to buy a fraction of a Bitcoin.