Florida Real Estate News –
What is Bitcoin? Here’s everything you need to know
NEW YORK – Bitcoin, the best-known of the upstart digital currencies, is still a mystery to many Americans.
If you’ve heard about Bitcoin, it’s mainly from startling headlines about its 400 percent price gain earlier this year, or its surge to nearly $5,000 last month, making it the most-valuable player in the mushrooming space for so-called cryptocurrencies. Or because Wall Street skeptics call it a “fad,” a “fraud” and a “speculative bubble.”
Believers in Bitcoin say it’s the money of the future, a digital alternative to the dollar, euro or yen. Non-believers say it’s not real money. After all, you can’t dig into your pocket and pull one out like a $10 bill and hand it to a cashier at Dunkin’ Donuts to pay for your morning coffee.
Some investment pros say it’s a new asset class, no different from a stock, a bond or an ounce of gold, and that it has great investment promise. Skeptics say it’s not an investment because there’s no good way to value it.
So what exactly is it?
Bitcoin is a digital currency and digital payment system that allows people to send and receive Bitcoins – or digital tokens – to anyone, anywhere in the world. It runs on a decentralized network of computers where all transactions are recorded, verified and updated by technology known as blockchain, which is akin to an online public ledger. Unlike traditional payment networks such as Mastercard, Bitcoin isn’t owned by anyone. There’s no central authority, such as a bank or government, that’s in charge of it.
How do you buy Bitcoin?
An easy way to get started is to set up an account with a Bitcoin exchange like U.S.-based Coinbase, which allows you to purchase Bitcoins with money from your bank account or credit card. And just like the New York Stock Exchange is a place you can go to buy and sell stocks like Apple or Amazon, these exchanges will let you trade cryptocurrencies.
How do I access my bitcoin ‘money’?
Bitcoins purchased on an exchange or received in a transaction can be stored and accessed in a so-called “Bitcoin Wallet,” which is like a bank account. A Bitcoin Wallet lets you receive Bitcoins, store or save them, and send them to others. There are apps that allow you to install a Bitcoin Wallet on your computer or mobile device.
Where can I spend it and what can I buy with it?
You can spend your Bitcoin at any retailer set up to accept Bitcoin. But Bitcoin hasn’t yet enjoyed widespread adoption, and those retailers that do accept it mostly are set up online. You can use Bitcoin at discount retailer Overstock.com. You can also go online and use Bitcoin at Microsoft to buy apps, games and videos on Xbox, book airline tickets from CheapAir.com or hotel rooms from Expedia, purchase a satellite TV subscription from Dish Network or buy a sub sandwich from an Allentown, Pa., Subway store. One way to get around retailers not accepting Bitcoin is to purchase gift cards for retailers like Amazon or BestBuy at gift card makers like eGifter that accept Bitcoin.
How are Bitcoins priced?
The price is determined by supply and demand – and market forces. The Bitcoin supply will be limited to 21 million, and currently there are roughly 16.6 million. Whether Bitcoin rises or falls in value depends on whether investors believe it will gain widespread acceptance, whether it can avoid being shut down by governments and whether it can continue to dominate the digital currency market or be surpassed by one of more than 1,100 other cryptocurrencies.
What do investors need to know about Bitcoin?
Bitcoin has gained most of its notoriety as an investment. A single Bitcoin ended 2016 at around $950 but skyrocketed to nearly $5,000 on Sept. 1. That’s a gain of around 425 percent. But one of Bitcoin’s downsides is that it has proved to be wildly volatile. Three weeks after hitting its 2017 peak, it had given back more than 25 percent before rallying back 20 percent to around $4,350 Friday.
Bulls like Thomas Lee, founder of Wall Street firm Fundstrat Global Advisors, see promise. His firm thinks Bitcoin could be worth $6,000 by the middle of 2018, 40 percent higher than current levels. His long-term target is as high as $25,000 by 2022. He believes Bitcoin will enjoy “broader adoption” as a “store of value” similar to gold.
But there’s some big bears out there. Jamie Dimon, CEO of J.P. Morgan, has called Bitcoin a “fraud.” His fear is that when people start to lose money, governments around the world will eventually “shut down” exchanges that trade digital currencies. “It will end badly,” he said recently.