Bitcoin Trading and Cryptocurrencies
Firstly before learning how to make money out of bitcoin, it is important to understand how it all came about.
Bitcoin - the pros and the cons
Money used to be a fairly simple concept.
It all started off with a barter economy, I might hunt animals for food and you might give me clothing in exchange for that food.
Eventually tokens became seen as money and these evolved into gold and silver coins. The Romans started to use less and less of these precious metals in their coins and so the debasement of coinage was established, although the Romans may not have been the first.
Later banks started to issue notes against deposits and these led to Governments issuing bank notes, which did away with Gold and Silver altogether.
Later banks started creating money by lending out far more than the deposits they received. In fact banks are the biggest source of money supply at this time.
This takes us to the present day where most currencies are debased again and again and the actual coins have no real value other than that given them by the trust we have in those notes and coins.
Sometimes that trust is abused as the Germans and Austrians found out in the 1930s when they had to carry masses of notes in wheelbarrows to buy a loaf of bread (I do wonder whether this actually happened but, if it did not, it still illustrates the point!).
So I think a fair starting point for a discussion of BitCoin is the question...
DO YOU TRUST THE CURRENT SYSTEM? DO YOU TRUST THE BANKS, THE £££, THE $$$, THE EUROS?
My answer is YES, I tend to keep notes in my possession of all three and I keep money in banks. Even though I am aware that once I make a deposit with my bank that money is then owned by the bank, not me, I am merely a creditor of the banks.
However it is a qualified YES, I'm fairly sure that if push comes to shove any bank will grab what it can of my cash to save itself from going under. And the risk of a bank going under seems to be something of a constant these days!
But if the alternative is I lose all of my deposit, then it is better to let them take it - not that I would have any power to stop it!
On top of that every country seems very keen to debase its currency by printing ever more money, in whatever form, and is also keen to see its currency fall in value against other currencies.
So the situation is hardly ideal.
I hedge my position by holding deposits in various banks and in various currencies and by holding Gold and Silver coins.
This is where I see Bitcoin coming in useful.
Bitcoin is a crypto-currency and payment system and was introduced on 31st October 2008.
The supply of Bitcoin is limited to 21 million and by 2016 15 million had been created. It is expected Bitcoin will reach the 21 million maximum by 2140, ie in 24 years time.
The big plus of Bitcoin is that it is not possible for any Government, or any one else to debase this currency, at least not directly.
Having said that the value of a bitcoin is subject to market fluctuations.
Another plus is the growth of Bitcoin
In 2010 Bitcoin transactions were running around 10,000 transactions per month (tpm), they hit 100,000 tpm in 2011 and 1 million tpm in 2012. Currently tpm is running at around 7/8 million with the annual $ value of transactions in excess of $50 billion.
So 8 years after inception it is all going rather well and to me it is all about continued growth and acceptance.
If these figures continue to grow then I would expect the value of a single Bitcoin to keep on going up.
But there are risk factors, or cons if you prefer...
The price fluctuates, and, for example, fell in December 2013 when The People's Bank of China prohibited Chinese financial institutions from using bitcoins.
In fact I think that Government action is probably the biggest risk factor. The mathematics behind Bitcoin has stood the test of time and the idea (Bitcoin is truly part of new "Ideas" Economy) is decidedly valid.
But I can see that Governments might actually find Bitcoin useful for their own purposes. It is a very simple way of sending untraceable cash to wherever they may want it - a fairly useful facility!
If you want to do further research I would suggest this book...
Bitcoin - The Future of Money by Dominic Frisby
Note the comment by Richard Branson about this book...
"Read it and glimpse into the future!"
I will end this piece with a couple of interesting points from bitcoin book above (but there are lots more in the book itself, so highly recommended!)...
- We all use digital money already via our credit cards, cash cards and bank transfers. But Bitcoin goes one step further it is not just digital money, it is digital cash!
Not only that but it is estimated that only around 3% - 4% of people's money in the US and UK actually exists in physical form - the rest is digital.
It seems to me that if 97% of our cash is already digital that maybe it makes sense to have a part of that cash in a true digital currency that was designed that way from the start!
OK, that is it for now.
I think there is a strong case for Bitcoin right now and I have put my money where my mouth is!
To start the process, as I have, go to http://bitclub.bz/tr4der8888 and sign up for free
I have compiled further information on the subject:
I have also developed a course on trading Bitcoins & Crypto Currencies: