Over the past few months I have watched bitcoin’s value rise exponentially. I had no idea what bitcoin was and never even heard about crypto currency a few months ago. But with the recent government and media attention crypto currencies have received, they have become 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 transactions are secured by cryptography and each transaction has its own personal or private key. With its rise in value and popularity everyone wants a piece of the action. There are two major ways to make money with bitcoin. The foremost 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 deal has occurred they are then verified over the network by “miners” making use of complicated algorithms. As a reward for work they receive transaction fees and/or freshly minted bitcoins!
Through an investing standpoint there is a large risk/reward factor as this currency is relatively new and has no intrinsic worth causing volatility and big cost changes. A positive fact is that there is a huge amount of money invested in this and businesses are signing on to use this currency and 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. Great as more people are doing it the difficulty plus power needed to “mine” increases. Bitcoins have a maximum amount that can be struck (21 million). And as we get closer and closer to 21 million the amount of bitcoin rewarded for each prosperous “mine” gets smaller and smaller sized. Now “miners” looking to be lucrative have to invest in complicated high tech exploration rigs and there is still no guarantee they will be profitable or even make 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 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 can produce these or even get your hands on several cheap you would make a considerable profit 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 fraud artists are having a field day as well. Read articles, browse the forums, view the bitcoin market, and research your costs and ROI before even considering investing anything.
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In my opinion, 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.