Bitcoin is almost 10 years old however, its use certainly hasn’t become mainstream. So if you don’t know what Bitcoin is, don’t worry – many people don’t!
Bitcoin is a virtual currency that can be traded electronically. No one bank or Government holds Bitcoin and the currency isn’t physical. It operates on an open ledger called Blockchain. You buy Bitcoin with actual dollars and keep it an online wallet.
It was one of the first examples of, and is now the world’s biggest, cryptocurrency. Since the start of this year the price of one Bitcoin has tripled to over $2,500.
People like Bitcoin because it’s easy, it’s growing in acceptance and it’s anonymous.
In the global marketplace Bitcoin has offered speed and efficiency for online transactions. You can send Bitcoin anywhere in the world and it will arrive almost immediately, and don’t need a bank account. And until recently the transaction fees were minimal – although they have risen to as high as $5 US.
For people in countries where the Government has restricted the movement of cash, Bitcoin offers an attractive alternative.
It’s growing in acceptance
You can use Bitcoin to purchase items anywhere it’s accepted – with a bricks and mortar or online store or to trade between people. In fact, Australia is a high user of Bitcoin. Microsoft, Expedia, Dell and some Etsy vendors are just some of the outlets accepting Bitcoin as payment.
Your Bitcoin transactions aren’t linked to your name or any other identifying information.
However, Bitcoin is also very volatile.
The price rises and falls all the time. You may try to sell your Bitcoin and find the price has dropped by the time you complete your transaction.
Consumer protection is also lacking – once you send your Bitcoins there’s no way to get them back, unless the recipient decides to return them to you.
And of course, while some big companies are on the Bitcoin bandwagon its use is limited in comparison to traditional currency. Transaction fees are currently too high to justify using it for something as simple as an every day coffee.
So who is using Bitcoin?
Bitcoin has opened up a new technology to the world – a faster, more seamless way of sharing money cross borders. This technology is tipped to grow.
People who have a good understanding of this technology, a very diversified portfolio and a risk profile for this type of investment may find Bitcoin suitable for them. However, we don’t see it overtaking traditional investment options any time soon.
As with all investments, careful research and assessment of your circumstances should be undertaken before deciding if Bitcoin is for you.