In the last few months I have watched bitcoin’s value rise exponentially. I had no idea what bitcoin was and never even heard of crypto currency a few months ago. But with the particular recent government and media interest crypto currencies have received, they have gotten everyone’s attention.
Crypto currency or even more simply digital money is gaining acceptance quickly all over the world as it makes transactions quicker and cheaper. These types of transactions are secured by cryptography and each transaction has its own trademark or private key. With its within value and popularity everyone wants a piece of the action. There are two primary ways to make money with bitcoin. The very first is a pretty straightforward method of purchasing the coin as an investment and wish that its value increases. The second is the process of “mining” bitcoins. Once a transaction has occurred they are then confirmed over the network by “miners” using complicated algorithms. As a reward for their work they receive transaction costs and/or freshly minted bitcoins!
Through an investing standpoint there is a big risk/reward factor as this currency is relatively new and has no intrinsic value causing volatility and big price changes. A positive fact is that there is a huge amount of money invested in this and companies are signing on to use this currency so we have no idea when its value should go back to zero!
“Mining” also has a large risk/reward factor. In the beginning of bitcoin, you used to be able to “mine” with an ordinary laptop or home computer. But now as more people are doing it the difficulty and power needed to “mine” increases.
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Bitcoins have a maximum amount that can be minted (21 million). And as we obtain closer and closer to 21 million the amount of bitcoin rewarded for each profitable “mine” gets smaller and smaller. Now “miners” looking to be rewarding have to invest in complicated high tech mining rigs and there is still no guarantee they will be profitable or even create their costs back.
There is a 3rd and safer option, though. In a sudden happening that promises wealth the most lucrative venture is offering the tool that helps produce these types of riches. For example , in a gold hurry it would be the shovel and in “mining” for bitcoin it would be mining rigs or powerful graphic cards. If you possibly could produce these or even get your hands on some cheap you would make a considerable revenue flipping them. Unfortunately, only a choose few have the luxury of selecting this option.
With people flocking towards the riches dangling in front of them the scam artists are having a field day too. Read articles, browse the forums, watch the bitcoin market, and research your costs and ROI prior to even considering investing anything. For me, you should do this for a few weeks before putting any money into play. This is an extremely volatile market and an even riskier investment.